Oil Rounds Get Discussed

The expert debate surrounding Mexico's suspended oil bidding rounds, cancelled in 2019, has resurged amid falling PEMEX production, declining investment, and a growing fiscal gap. Energy law experts argue that the current administration's "mixed contract" model functions primarily as a production-enhancement tool for known fields rather than a vehicle for risk-heavy, long-term exploration. Reactivating competitive bidding would allow private capital to absorb 100% of the geological risk while providing the Mexican state with immediate fiscal revenues, establishing a vital dual-coexistence between private investment and PEMEX without eroding state sovereignty over energy assets.

The suspension of Mexico's oil bidding rounds, cancelled in 2019 at the start of the López Obrador administration, has resurfaced as a topic of serious expert debate. Driven by the convergence of declining PEMEX investment, falling production, and a growing fiscal gap between what the state oil company generates and what the federal government must transfer back to keep it solvent. The question being asked with increasing urgency in academic and legal circles is whether the mixed contract model the current administration has deployed is sufficient to reverse a structural production decline, or whether a broader reopening of exploration activity to private capital is now unavoidable.

The oil rounds emerged from the 2013 energy reform and allowed national and foreign private companies to compete for areas with potential hydrocarbon content. Under this scheme, companies committed millions of dollars to geological studies, exploration activities, and reserve evaluation. When explorations proved unsuccessful, losses were absorbed by the private companies themselves, without impact to the federal government or PEMEX.

The now-dissolved CNH was responsible for designing and conducting the bidding processes. In total, three oil rounds were carried out, resulting in the award of 103 contracts across onshore, shallow-water, and deepwater areas. By the close of 2024, these contracts had generated revenues of US$12.271 billion, while accumulated investments as of February 2025 reached US$18.969 billion.

The scheme was cancelled in 2019, at the beginning of the López Obrador administration, under the argument that the contracts had not delivered the expected results and reduced PEMEX's role. The fiscal and investment numbers, however, tell a different story: US$12.271 billion in revenues and US$18.969 billion in accumulated private investment represent a capital contribution to the hydrocarbons sector that no subsequent mechanism has matched.

The Fiscal Case for Reactivation

During the International Congress on Regulation, Energy and Sustainability in Ibero-America, organized by UNAM's Legal Research Institute, energy law specialist Ayax Gutiérrez Villascán stated that the suspension of the scheme has had economic consequences for the country by reducing exploration and production activities. "At a lower number of activities, we have a lower number of revenue capture, especially fiscal revenues. The simple fact of signing a contract already generated income for the Mexican state — we already had a constant flow of revenues, but now with the renunciation of various contracts and the pause in oil rounds, we have this decrease in capital derived from exploration and production activities," as reported by Expansión.

The specialist noted that the decrease in exploration and extraction projects directly impacts public finances because the Hydrocarbon Revenue Law establishes quotas and contributions that contractors must fulfill. That mechanism, where the act of signing a contract with a private firm generates an immediate fiscal inflow, before a single barrel is produced, is what the current administration's mixed contract model only partially replicates, since the 54% CFE or PEMEX minimum-stake requirement fundamentally changes the fiscal architecture of the transaction.

Gutiérrez Villascán maintained that reactivating the rounds does not mean the Mexican State would lose its stewardship over energy resources nor that PEMEX's legal prevalence would be eliminated. "It is essential to reactivate the oil rounds because today, at the global oil industry level, there must be coexistence between the development of activities by the state company alongside the joint or independent participation of private capital," he affirmed.

The specialist considered that joint participation between the state company and private capital would allow increased oil activity and, with it, higher state revenues. "However, there must be that coexistence so that the flow of activities increases and, above all, fiscal and financial income to the Mexican state's coffers, thus helping the communities and municipalities where hydrocarbon sector activities are developed," he added.

The argument reflects a position that has gained traction among energy economists in 2026: that the constitutional and legal architecture now in place, which establishes PEMEX's prevalence in dispatch and requires state majority stakes in mixed projects, does not technically prohibit a competitive bidding process for exploration acreage, it simply has not been politically activated.

The Mixed Contract Gap

The expert acknowledged that while current energy policy seeks for PEMEX to maintain a predominant role, the company faces a financial situation that limits its investment capacity. Currently, policy has been oriented toward mixed contracts between PEMEX and private companies, with 10 areas in the process of formalization. However, these projects are concentrated in already-identified fields with known reserves, without including new exploration activities. For specialists, the absence of new rounds limits the possibility of incorporating additional reserves and attracting long-term investments to strengthen public finances.

That distinction is operationally significant. Mixed contracts, as currently structured, are workover and production-enhancement vehicles for fields PEMEX already operates. They are not exploration instruments. The company's 10 awarded mixed contracts are projected to generate approximately 76Mb/d additional in incremental production in 2026, with a moderate increase thereafter, meaningful but insufficient to offset PEMEX's underlying decline rate, which Moody's has characterized as running in the low 20% range on a production-weighted basis at major fields.

The Exploration Void

The absence of competitive exploration since 2019 means Mexico has not systematically evaluated large swaths of its sedimentary basins through the kind of multi-company, multi-technology exploration campaigns that generated the 103 contracts awarded under the three oil rounds. Private companies drilling exploratory wells under those contracts absorbed all the geological and commercial risk. When exploration results were negative, the losses fell on the investor, not on the public finances. That risk-transfer mechanism, the defining commercial logic of the oil round model, is precisely what is absent from the current mixed contract architecture, where PEMEX's majority stake means it shares in exploration losses as well as production gains.

Gonzalo Monroy of consultancy GMEC has estimated that at current drilling rig counts, falling from 32 to 25 active rigs in the first five months of 2026, Mexico is on a trajectory toward 1.2MMb/d of liquid hydrocarbon production by 2027, potentially below 1MMb/d of net extraction once water cuts are discounted. That trajectory is the quantitative context within which the oil rounds debate is taking place: not as a theoretical policy preference but as an operational urgency.