Oil & Gas in Mexico: Opportunities Amid Regulatory Change

Mexico’s oil and gas sector is undergoing a period of immense transformation, shaped by recent regulatory reforms, shifts in state strategy, and evolving opportunities for private investors. At the center of this change is PEMEX, which continues to play a dominant role in exploration, production, and midstream operations. The combination of constitutional amendments, secondary legislation, and administrative restructuring aimed at strengthening energy sovereignty has reshaped sector operations, creating new demands for both the state and private companies seeking to engage in upstream and downstream projects.

According to Manuel Cervantes, Partner and Owner, MCM Abogados, the government has strengthened PEMEX through constitutional reforms and a comprehensive legal framework that positions the company at the core of exploration and production assignments. “The NOC takes the lead with its development assignments and the possibility of complementary secondary collaboration with private firms,” he notes. This centralization emphasizes the government’s focus on consolidating national sovereignty over hydrocarbon resources, while still permitting private sector involvement through mixed contracts, in which PEMEX retains a 40% stake.

However, Cervantes emphasizes that financial solvency and confidence remain crucial for attracting private investment. “The big question now is: what will PEMEX and the government do to regularize the former’s delicate financial situation?” 

While the government has indicated progress on payments to suppliers and debt obligations, uncertainty remains over whether these measures will adequately restore investor trust. PEMEX’s restructuring efforts, including the US$12 billion P-Caps, the US$13 billion Banobras fund and the preparation of first contracting procedures for mixed projects, are closely watched by both local and international stakeholders. The government’s approach to ensuring funds flow without compromising PEMEX’s existing budget will be a determining factor for investor confidence.

Administrative changes have also shifted decision-making power toward the Ministry of Energy. In previous years, CNH acted as an intermediary with limited authority, creating bottlenecks for project approvals. “We see the current situation as a positive change,” Cervantes notes. The Ministry of Energy now holds sectoral control, facilitating dialogue with the private sector and acknowledging the fundamental issue of funding and operational challenges. PEMEX, in parallel, continues an internal restructuring process, adjusting teams and points of contact while outlining its vision for mixed contract projects.

Mixed contracts are emerging as a primary vehicle for collaboration between the state and private operators. Marco Antonio de la Peña, Senior Associate, Cuatrecasas, explains that while PEMEX is assigned the majority of production responsibilities, the Hydrocarbons Sector Law allows for exceptions through mixed contracts. Currently, 21 such contracts are under evaluation, and the government has announced that 11 have already secured private operators. Under these agreements, PEMEX aims to increase production by 69Mb/d of oiland more than 600MMcf/d of natural gas. The contracts provide a framework in which private investment can support state-led objectives while maintaining operational and financial transparency.

Despite these developments, challenges remain. De la Peña highlights the importance of project finance in making oil and gas projects viable under Mexico’s evolving regulatory framework. “The major challenge is how to finance a project where, together with PEMEX, the private party ensures return on investment and income from the contract or profits in a mixed scheme,” he explains. De la Peña highlights that legal mechanisms, such as mixed contracts and specialized trusts, can channel contract revenues directly to both private and public partners, increasing transparency and bank confidence. For independent projects, financing is typically assessed over the project’s lifetime, with repayment secured through project-generated revenues. He stresses that the feasibility of both state and independent initiatives depends heavily on legal and regulatory certainty, particularly regarding permitting, compliance, and integration within binding national energy planning.  

The regulatory environment for Mexico’s oil and gas sector not only remains complex, but will also continue evolving as new regulations are put in place by the new regulatory bodies. Grupo CIITA, a consulting firm specializing in energy and regulatory compliance, works closely with operators to navigate these evolving rules. “Now that this so-called third energy reform is approaching, uncertainty is growing. Right now, we only have the secondary laws, but we are still missing the actual regulations, standards, and administrative provisions,” explains Beatriz Marcelino, CEO and Founder, Grupo CIITA. She notes that public-private or “mixed” contracts could create opportunities, but the lack of clear rules remains a key challenge. Marcelino also points to progress in streamlining procedures from agencies like ASEA, but emphasizes that “more is still needed, especially from SENER,” as companies wait for definitive guidance to plan investments confidently.

Illegal fuel imports have also shaped market dynamics and investment decisions. Rajan Vig, CEO, Indimex, recalls the severe impact of uncontrolled huachicol activities, which forced companies to halt operations due to uncompetitive pricing and reputational risks. “We simply could not compete with price distortions from illegal imports,” he said. “Worse, some of our clients, whom we had considered clean, turned out to be involved in such practices. It only takes seconds to destroy a reputation that took years to build.” He adds that enforcement efforts under President Claudia Sheinbaum, particularly the crackdown on huachicol, represent a major shift from the previous administration. Vig believes that if the government successfully eradicates illegal fuel entry, it could “open the door for real collaboration,” allowing private operators to invest in infrastructure, storage, and last-mile logistics alongside PEMEX, creating a more transparent and stable energy market.

The focus on upstream oil development is complemented by broader attention to energy security and infrastructure constraints. Mexico’s pipeline capacity, storage facilities, and port infrastructure remain limited, posing challenges for both domestic distribution and cross-border trade. Companies seeking to participate in mixed contracts or independent projects must navigate these structural constraints while aligning with the state’s energy objectives. 

The intersection of policy, regulation, and private investment reflects a broader strategy under the current administration: a model of state-led leadership complemented by targeted private participation. Experts emphasize that the government’s economic needs, particularly in meeting growing demand for hydrocarbons and electricity, demand private involvement. Project finance evaluations now depend on regulatory certainty, integration with national planning, and transparent mechanisms for cost recovery. While constitutional and legislative provisions have largely been aligned, ongoing work is needed to refine regulations and provide clear pathways for private operators.

The current landscape demonstrates a cautious yet deliberate approach to sectoral reform. The government is consolidating PEMEX’s central role, implementing mixed contract mechanisms, and encouraging private investment under a framework of legal and financial transparency. At the same time, the private sector must navigate regulatory uncertainties, infrastructure limitations, and market risks, including illegal fuel activity and complex permitting requirements. The evolving environment highlights the critical balance between state oversight, investor confidence, and operational efficiency in Mexico’s oil and gas sector.

As Mexico moves forward, PEMEX’s financial restructuring, the operationalization of mixed contracts, and enforcement of fuel market regulations will be decisive factors shaping the sector. Private companies that understand the new legal framework, engage with regulatory authorities, and align their projects with national priorities are likely to play a growing role in upstream, midstream, and downstream operations.

Follow our MOGS 2025 tag and don’t miss our coverage leading to Mexico Oil & Gas Summit 2025 on September 23 and 24, 2025. On Thursday, September 17, 2025, we will delve into The Next Chapter of Pemex-Private Partnerships. 

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