Stacked oil drums

Initiative to amend the Mexican Hydrocarbons Law

Global Publication March 2021

On March 26, 2021, the President of Mexico sent an initiative to reform and add several provisions of the Hydrocarbons Law (the "Initiative").

Among the main amendments proposed under the Initiative, the Ministry of Energy (“SENER”) and the Energy Regulatory Commission (“CRE”) may suspend the permits provided for in the Hydrocarbons Law, namely, for the treatment and refining of oil, the processing of natural gas, the export and import of hydrocarbons and petroleum products, as well as the transport, storage, distribution, compression, liquefaction, decompression, regasification, commercialization and sale to the public of hydrocarbons, petroleum products or petrochemicals, when an imminent danger to national security, energy security or the national economy is anticipated.

The foregoing means that SENER and the CRE will have a discretional margin to determine the suspension of such permits. Additionally, it is important to note that the Initiative provides that in order to guarantee continuity in the operation of the activities covered by the permit in question, the authority may only contract State productive companies, eliminating the possibility of also contracting third parties with sufficient technical capacity.

Finally, among other things, the Transitory Articles contained in the Initiative set forth that once the corresponding Decree becomes effective, the permits whose holders do not comply with the applicable requirements or that breach the provisions of the Hydrocarbons Law will be revoked.

It is important to consider that the Initiative is still subject to the conclusion of the corresponding legislative procedure before it becomes effective, so it may be subject to subsequent changes.

For more information regarding the content or scope of the Initiative, please contact César Fernández.



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