Global | Publication | October 2025
As a result of the enactment of the Hydrocarbons Sector Law (LSH) and the amendment to the Hydrocarbons Revenue Law (LISH), published in the Federal Official Gazette (DOF) earlier this year, on October 3, 2025, the decree issuing the Regulations of the Hydrocarbons Sector Law (LSH Regulations) was published, along with the decree amending and repealing several provisions of the Regulations of the Hydrocarbons Revenue Law (LISH Regulations).
The publication of the LSH Regulations is key for the implementation of the LSH, as it details the powers, obligations and procedures applicable to activities in the hydrocarbons sector. Upon its entry into force, the regulations of the Hydrocarbons Law and the regulations related to the activities under Title Three of the Hydrocarbons Law, both published in the DOF on October 31, 2014, are repealed. Some of the most relevant points of the LSH Regulations are summarized below:
The procedure for granting asignaciones by the Ministry of Energy (SENER) to Petróleos Mexicanos (PEMEX), either for own development or mixed development, is established. In the event that SENER decides to grant a new asignación to PEMEX, it must notify PEMEX so that it may accept or reject such grant. Deadlines and acceptance requirements are established, as well as the possibility for PEMEX to request a new asignación. If PEMEX rejects the development of an asignación area to be granted by SENER, the latter may assign such area to other legal entities through hydrocarbon exploration and extraction contracts.
It is important to highlight that Article Transitory Twenty-Fifth of the LSH Regulations provides that the Ministry of Finance and Public Credit (SHCP) and SENER may issue joint rules to assess the feasibility of replacing a hydrocarbons exploration and extraction contract with an asignación when this benefits the Mexican State. This provision is particularly sensitive, as a substitution of this nature could infringe contractors’ acquired rights, as well as contravene constitutional principles of legal certainty and non-retroactivity, and affecting the protection of investments provided for in various international treaties entered into by Mexico.
The procedure whereby PEMEX may request the migration of an own development asignación to a hydrocarbon exploration and extraction contract is detailed. Within such requests, PEMEX may express its interest in forming partnerships with legal entities in connection with the migrated contract. In such cases, the migration request must include documents specifying the technical, financial, execution and experience requirements that interested entities must meet to participate in the bidding processes related to the contracts subject to migration.
Furthermore, PEMEX must demonstrate that the proposed migration would yield greater benefits compared to a substitution with a mixed development asignación. The request must be accompanied by supporting technical, economic and operational information.
SENER will assess the admissibility of migration requests. If deemed appropriate, it will define the applicable contracting model, along with the technical terms and fiscal conditions, in coordination with the SHCP. Additionally, in cases where PEMEX enters into partnerships with legal entities, SENER may revise the terms of the association and the joint operating agreement.
The procedure to convene bidding procedures for the awarding of hydrocarbon exploration and extraction contracts is established, subject to SHCP’s approval. One or multiple contracts may be tendered, and interested parties may participate in one or several of the areas included in the bidding round. The bidding guidelines may incorporate mechanisms or rules deemed appropriate to ensure the optimal execution of the bidding procedures.
The procedure applicable to the granting of asignaciones shall likewise apply, as appropriate, to the substitution of an own development asignación with a mixed development asignación.
Private entities and state-owned enterprises (empresas públicas) may hold permits for various industry activities, ensuring Non-Discriminatory Open Access.
SENER, or the National Energy Commission (CNE) with SENER’s favorable opinion, may grant temporary permits to state-owned enterprises (empresas públicas) for extraordinary or emergency situations.
SENER and CNE may determine the term of permits' validity, considering each project’s characteristics, binding planning, applicable regulations, and various technical, economic, and regulatory criteria. In this regard, the following maximum terms of validity for permits that may be granted are contemplated:
| Permitted activity | Maximum effective term |
| Oil | |
| Treatment, refining, pipeline transportation, storage | 30 years |
| Transportation by means other than pipelines | 20 years |
| Natural gas | |
| Processing, pipeline transportation, storage, pipeline distribution | 30 years |
| Liquefaction, regasification, compression, decompression, transportation by means other than pipelines, distribution by means other than pipelines, retail sales | 20 years |
| Liquefied petroleum gas | |
| Storage, pipeline transportation, Pipeline distribution | 30 years |
| Distribution through plant, retail sales | 20 years |
| Transportation by means other than pipelines, distribution by means other than pipelines, dispatch for self-consumption | 15 years |
| Petroleum products other than liquefied petroleum gas | |
| Storage, pipeline transportation, distribution by means other than pipelines | 30 years |
| Retail sales | 20 years |
| Transportation by means other than pipelines, dispatch for self-consumption | 15 years |
| Formulation | 5 years |
| Petrochemicals | |
| Storage, pipeline transportation | 30 years |
| Transportation by means other than pipelines | 15 years |
| Integrated systems management | 30 years |
| Import, export of crude oil, natural gas, liquefied petroleum gas, petroleum products other than liquefied petroleum gas, or petrochemicals | 5 years |
| Marketing of the import and export of crude oil, natural gas, liquefied petroleum gas, petroleum products other than liquefied petroleum gas, or petrochemicals | 2 years |
Unlike the previous regulation, automatic renewal of the term of certain permits has been eliminated, therefore, if the permit holder requires to continue providing the service, they will be required to submit a new application.
The LSH Regulations set out the requirements and procedures for obtaining or modifying any permit regulated therein. In particular, in cases of change of control in the shareholding structure of the permit holders, as this is a substantial modification of the conditions under which the permit was originally granted, an evaluation and approval by SENER or CNE is required. This procedure can significantly extend the authorization times and, consequently, compromise the operational continuity of the corresponding permitted activity.
CNE has the authority to regulate and approve the consideration, prices and tariffs applicable to regulated activities in the LSH Regulations, ensuring access to goods and services with reliability, safety and quality, without constituting monopolistic practices. These tariffs will be considered legal maximums, although the permit holders may apply discounts, always in accordance with the principles of generality and non-discrimination, having to inform SENER or the CNE within a period of no more than 10 business days after signing the respective agreements or discounts.
On the other hand, the deadline for the resolution of requests for approval and issuance of considerations is extended from 90 to 120 business days.
The SHCP will determine the applicable bases and rules for recording costs, expenses, investments, and revenues related to Mixed Contracts and will be responsible for reviewing the costs incurred by the person participating in said Mixed Contracts and by PEMEX. In accordance with said review, SENER will publish a quarterly report regarding the actions taken. Both the SENER and the SHCP will be responsible for issuing the necessary provisions to review the cost recovery and accounting of the Mixed Contracts.
Asignatarios and contractors shall individually comply with the minimum percentage of national content determined by SENER, in coordination with the Ministry of Economy, within the framework of the asignaciones and hydrocarbon exploration and extraction contracts.
The purpose of the amendments to the LISH Regulations is to align the tax regime applicable to hydrocarbon activities with recent constitutional and legal reforms. These amendments mainly regulate tax and financial aspects related to the bidding procedures for hydrocarbon exploration and extraction contracts, as well as the migration of asignaciones. Below are some of the most relevant points:
SENER may request that the SHCP determines the tax terms applicable to the bidding processes for hydrocarbon exploration and extraction contracts. If, during the bidding process, there are significant changes in economic or market conditions that could restrict participation, the SHCP may adjust the corresponding tax terms, informing SENER so that it can make the necessary adjustments.
In the migration of asignaciones to hydrocarbon exploration and extraction contracts, SENER must submit to the SHCP the documentation related to the migration request, as well as the proposed terms of association and the joint operating agreement, in cases where PEMEX expresses its interest in forming partnerships with legal entities. When such partnerships are involved, the bidding process to select participating entities must include PEMEX’s favorable opinion regarding the technical, financial, execution and criteria that interested companies must meet to participate in the migrated contract.
SHCP may approve the proposal submitted or issue comments on PEMEX’s opinion regarding the financial aspects of the migration procedures involving partnerships. These comments must be duly addressed by PEMEX, in the interest of maximizing state revenues.
It is established that SENER must register the hydrocarbon exploration and extraction contracts in the registry established for this purpose by the Mexican Petroleum Fund. Contractors must provide the necessary information to SENER.
The lack of registration will prevent contractors from receiving the corresponding compensation, without releasing them from their payment obligations to the state.
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