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Mexico: Constitutional Amendment on Energy

(Feb. 12, 2014) In December 2013, the Mexican government approved an amendment to a number of provisions on energy in the country’s Constitution. (Decreto por el que se Reforman y Adicionan Diversas Disposiciones de la Constitución Política de los Estados Unidos Mexicanos, en Materia de Energía [Decree that Amends Provisions of Mexico’s Constitution Concerning Energy], DIARIO OFICIAL DE LA FEDERACIÓN (Dec. 20, 2013), Mexican House of Representatives website.) Pursuant to the amendment, the Mexican State may now explore for and extract oil and other hydrocarbons through contracts with private entities or with PEMEX (the Mexican state-owned oil company). (10 Puntos Clave de la Reforma Energética, Blog, Presidency of the Republic of Mexico website (Dec. 22, 2013).)

Prior to this amendment, agreements with private entities for oil exploration were not allowed under the Mexican Constitution. These contracts may provide for profit-sharing arrangements, production sharing, services, or a combination of these options, although hydrocarbons will continue to be national property, as before the reform. (Id.)

Mexico’s President has indicated that the constitutional amendment will allow the country to have access to the technology and financial resources provided by private companies that are necessary to reach hydrocarbon deposits in deep waters as well as shale gas. (Palabras del Presidente de los Estados Unidos Mexicanos, Licenciado Enrique Peña Nieto, durante la Promulgación de la Reforma Constitucional en Materia Energética [Speech of the President of the United States of Mexico, Enrique Peña Nieto, on the Occasion of the Enactment of the Constitutional Amendment on Energy], Blog, Presidency of the Republic of Mexico website (Dec. 20, 2013).)

Also, pursuant to the amendment, private investments will be allowed in oil refining and in the transportation, storage, and distribution of oil, natural gas, gasoline, and diesel fuel. Private companies will be allowed to participate in the generation and commercialization of electric energy as well. (10 Puntos Clave de la Reforma Energética, supra.)