• Energy sector liberalization reversed
• State-owned CFE and Pemex to dominate energy sector
• Large energy players planning to exit Mexico due to restrictive laws

Mexico has made sweeping changes to energy laws that eliminate independent regulators and will likely lead to muted M&A activity in an already slow deal space.

The laws, which also require state-owned companies to have majority shares in projects, are set to restrict foreign investment and have already seen some major energy companies, like Shell, decide to exit the country and sell domestic operations.

The move reverses a brief period of energy sector liberalization in the country and sets the stage for state-owned Comision Federal de Electricidad (CFE) and Petroleos Mexicanos (Pemex) to continue to dominate the energy sector. The new laws mandate that 50% of Mexico’s national electric grid must be powered by CFE.

Carlos Martinez, Mergermarket’s head of energy coverage in the Americas, joins Dealcast host Julie-Anna Needham to discuss the outlook for the Mexican energy sector, including:

• How these changes were taking shape prior to President Claudia Sheinbaum’s current government
• What this means for Mexico’s renewable energy sector, especially as traditional energy like oil production continues to steadily decline in the country
• Which other large energy companies are exiting the country and divesting their Mexican operations
• Why this will likely drive JVs and partnerships, especially with existing domestic contractors

All this and more in this week’s Dealcast.

by Avery Koop and Carlos Martinez