• New framework rolls back short-lived opening of sector
• State-owned companies to hold majority stakes in projects
• Government given increased planning powers

Recent changes to Mexico’s energy regulatory framework reassert the state’s role in the industry while opening the door for joint venture (JVs) opportunities.

The overhaul of eight energy-related laws in March rolls back the short-lived opening of Mexico’s energy sector to private investment spearheaded by the administration of former President Enrique Pena Nieto, said an executive at a Mexican energy monitoring company.

The changes formalize former President Andres Manuel Lopez Obrador’s push to prevent private companies from competing against national oil company Petroleos Mexicanos (Pemex) and state-owned utility Comision Federal de Electricidad (CFE), a former advisor to the Energy Secretariat said.

Pemex, for example, formed 12 JVs in 2016 but only four in 2023, according to financial filings. Electricity-related permits handed out by energy regulator CRE also fell from 1,105 in 2018 to 122 in 2023, according to an analysis by public policy institute Mexico Evalua.

The new regulatory framework will allow Pemex and CFE to form new JVs with private companies while retaining majority stakes in the ventures.

Pemex, for example, will be able to sign ‘mixed development contracts’ to share costs, investments, and risks with private companies, according to the new regulations. The company plans to invite private companies to bid to help build natural gas liquefaction plants, this news service reported in May.

“Future growth in the sector will depend heavily on these partnerships,” pointed out Jorge Sanchez, energy specialist at KPMG.

The last sizable M&A deal in the sector was Grupo Carso’s USD 530m acquisition of PetroBal Upstream Delta 1, which holds a 50% in the Ichalkil and Pokoch shallow-water fields, from Petrobal, he noted.

“We haven’t seen much interest in attracting foreign investment; instead, the focus appears to be on local investment,” Sanchez said, noting that foreign companies might still participate through JVs.

Pemex plans to introduce a new four-year business plan to its board in 3Q25, which should include more details about private investment opportunities, corporate planning chief Jorge Alberto Aguilar said in a 30 April earnings call.

On the electricity side, CFE will be able to sign ‘mixed development contracts,’ where it can buy electricity produced by private projects through long-term power purchase agreements or co-develop power generation projects with private companies while retaining a stake of at least 54%, Marco Antonio de la Pena, partner at Cuatrecasas and specialized in infrastructure and energy projects.

In April, the state-owned utility presented a five-year expansion plan that calls on private companies to co-develop renewable energy projects with a combined generation capacity of 6,400 megawatts for an estimated investment of MXN 130bn (USD 682m).

Private companies are expected to be able to bid for co-generation power plants and isolated power grids, said the former advisor to the Energy Secretariat.

Several energy funds in the US, Canada, Italy, and Norway have expressed interest in partnering with CFE, a sector banker said.

Pemex representatives have held talks with potential partners for JVs in specific hydrocarbon production, Debtwire reported.

The new regulatory framework calls for the Energy Secretariat to determine which oil fields should be developed and where new power plants should be built, said Alfredo Orellana, a former official at the Energy Secretariat and CRE.

These laws “strengthen Mexico’s energy sovereignty while also guaranteeing the stability of energy supply,” Energy Secretary Luz Elena Gonzalez said on a 5 February press conference.

The coming months will show the government’s commitment to allow private companies to invest in Mexico’s energy sector, the executive at an energy monitoring company said. While the country’s energy needs are too big for the government to keep private investors out, the administration of former President Lopez Obrador showed how easy it is for the government to bypass regulations, he added.

The government still needs to publish norms and regulations regarding JVs and contracts, which will provide private investors with a better sense of the opportunities that lie ahead, said Alvaro Vertiz, partner at global advisory firm DGA Group.

The first set of rules, relating to the newly created National Energy Commission, were published on 8 May and more are expected to be published later this summer, as reported by this news service.

 Leonardo Peralta, Jessica Bigio and Adriana Curiel