The Next Chapter of PEMEX-Private Partnerships

Mixed Development contracts are set to become the most consequential instrument for Mexico’s upstream sector over the next six years, following an administration closed to further private development. The new guidelines for mixed development schemes require PEMEX to retain a minimum participating interest, while allowing private partners to contribute capital, technology or operational capacity. The central policy tradeoff is straightforward: preserving national control of the subsoil while creating clear, bankable economics and enforceable counterparty protections that make long-term investment rational.

According to Fernanda Ballesteros, Mexico Country Manager, Natural Resource Governance Institute, there are high expectations for the execution of the new mixed contracts, but also many questions regarding their terms and the processes that have been generated in the last month. She noted that from a business perspective, PEMEX has received significant government support, with the 2026 budget contemplating more than MX$260 billion for the company, a figure that is larger than the budget for the recently created IMSS-Bienestar and six times the environmental budget. 

The fiscal reality driving the mixed-contract agenda is undeniable. PEMEX entered 2025 with one of the highest debt burdens among oil companies globally and with sizable payment obligations to suppliers. The federal government and financial markets responded with targeted instruments, including a US$12 billion pre-capitalized securities issuance that reduced near-term refinancing pressure, partial funding for upstream investments and supplier payments via the US$13 billion Banobras Investment Fund, and a tender offer of nearly US$10 billion for long-term debt backed by sovereign transfers. However, the company’s leverage and negative free cash flow dynamics remain material constraints on autonomous PEMEX funding for exploration and large-scale development. 

Any mixed contract that anticipates PEMEX as an active cash contributor must therefore be realistic about when and how the state company will meet capital calls; more credible contracts, and those that will attract international partners, will rely on alternative payment and risk-transfer mechanisms rather than on unconditional PEMEX funding alone. According to Manuel Cervantes, Founding Partner, MCM Abogados, a fundamental issue is PEMEX's financial credibility and the need for a secure payment mechanism for the private investor, suggesting that the law should permit payments in either cash or in-kind to provide flexibility. "A central point is PEMEX’s financial credibility and the consistency between what it asks for and what it actually delivers. We must not forget that there is a universe of creditors, and among them are potential participants for these mixed contracts,” he noted.

Structuring mixed contracts to mitigate counterparty risk requires a suite of contractual and financial design choices. Escrowed payment mechanisms, in-kind offtake arrangements, performance-linked disbursements, step-in rights for technical operators, and clear dispute resolution paths are all practicable elements. Sponsors will also evaluate whether contracts permit cost recovery or profit sharing that is visible and predictable. 

Given global lenders’ and insurers’ sensitivity to sovereign and political risk, attaching guarantees, sovereign or quasi-sovereign wrappers, or multilaterally backed instruments can materially lower the risk premium and unlock export credit or insurance capacity. The new guidelines already contemplate that PEMEX need not always make capital contributions and that private partners can fill funding gaps, but legal clarity is required on tax treatment, royalty sharing, and PEMEX’s obligations when it acts as a minority or non-funding partner. 

Jorge Anaya, Vice President of Legal and Business Services, Harbour Energy, explained that investors are familiar with how different models work in other countries and cautioned that the more the Mexican contracts deviate from established international models, the more it could create doubt for investors.

The Natural Resource Governance Institute will press for transparency, contract disclosure, and independent auditability so that public interest and investor certainty are aligned. IMP can provide the applied R&D and technical verification needed to quantify reserves, design enhanced recovery trials, and validate engineering schedules that underpin financing models.

Governance and operational integration are set to be core risk mitigants. Alma América Porres, Former Commissioner, CNH, outlined three key governance pillars needed for success: a clear decision-making structure that includes both PEMEX and its partners, detailed contractual agreements covering sustainability and dispute resolution, and transparent protocols for sharing financial and operational data. 

At the policy level, locking in taxation, royalties, and environmental obligations for the life of the project, or at least creating predictable adjustment mechanisms, is essential to avoid the type of retroactive policy risk that deters long-dated capital. The Natural Resource Governance Institute and civil society scrutiny can amplify reputational consequences for opaque deals, which in turn affect access to institutional capital.

Independent operators such as Jaguar E&P and international partners like Harbour Energy are likely private sponsors who will test these schemes in practice, offering capital, operational capability, and often the technical innovation that PEMEX needs for complex fields. Each actor’s incentives differ, but a successful mixed contract must be reconciled into a single, executable project plan. "I do not believe the mixed contracts model will be enough to reach the production goals the federal government has outlined. I think there should be a possibility for a hybrid approach: a mix of using mixed contracts for some projects and also reintroducing the possibility of licensing rounds to boost national production and allow companies that want to risk their capital to do so,” said Sergio Pimentel, Legal Director, Jaguar E&P.

Antonio Escalera, Senior Consultant, Tethys Energía, also questioned the effectiveness of a single contract structure for all types of projects. He noted that the cost recovery model for mature fields requiring enhanced recovery might need to be different from that for capital-intensive deepwater or extra-heavy oil projects, arguing that more creativity is needed in the implementation of these new contracts.

Energy expert Flavio Ruiz Alarcón argued that the contracts should also be part of a long-term national strategy focused on technology transfer and human capital development, not just a short-term solution for PEMEX's finances, a goal that previous legislation on this regard also failed to meet. "My criticism of the previous legislation is that although the model seemed promising, in the end was limited. These schemes were conceived as a way to alleviate the financial deficiencies of PEMEX, and not as a way to achieve technology transfer, human resource development, or training in the knowledge of diverse geological challenges,” highlighting PEMEX’s lack of international experience when compared with global peers.

ESG considerations are increasingly non-negotiable for the private firms likely to partner with PEMEX. Mixed contracts that embed emissions targets, methane and flaring caps, social investment commitments, community consultation processes, and independent environmental monitoring will be more attractive to international investors and insurers. Technical partners and research bodies such as IMP can codify low-emission development pathways and quantify the incremental capital required for cleaner operations, enabling a transparent trade-off between near-term returns and longer-term ESG compliance. If Mexico can demonstrate that mixed projects adhere to international ESG norms, it will be easier to source capital at scale and to unlock reinsurance and export credit agency support.