April 22, 2021

Mexico Discusses to Revoke Asymmetric Regulation to Pemex

Holland & Knight Alert
Carlos Ochoa | Alejandro Landa Thierry | Aldo González

On April 20, 2021, the Mexican Energy Commission of the Chamber of Representatives (Comisión de Energía de la Cámara de Diputados) held an extraordinary session to present and approve on the same day a bill to reform the Hydrocarbons Law (Ley de Hidrocarburos or LH) to remove the asymmetric regulation to Petróleos Mexicanos (Pemex) concerning firsthand sales for hydrocarbons, oil products and petrochemicals. The sales are those made at Mexico's point of import, refineries or processing plants. This bill is complementary to the reform in discussion in the Mexican Senate. (See previous Holland & Knight alert, "Mexico's Lower House Approves Bill to Reform Oil and Gas Sector, April 16, 2021.)

According to the LH, Pemex has to comply with certain regulatory obligations to limit its market position, while higher participation of economic agents is achieved to reach an efficient and competitive development of those markets. This regulation intends to achieve higher participation of competitors and better market conditions.

According to the chamber commission, the asymmetric regulation has achieved its goal, and the Energy Regulatory Commission (CRE) no longer requires such regulatory authority. Notwithstanding the preceding, the Federal Competition Agency (Comisión Federal de Competencia Económica or COFECE) has the authority to prevent, investigate and combat restrictions to the efficient operation of the energy markets.

The bill was discussed and approved by the Plenum of the Lower House (Pleno de la Cámara de Diputados) on April 21, 2021. It is now in the hands of the Senate for discussion and voting. If approved, the president is expected to enact it in Mexico's Official Federal Gazette (Diario Oficial de la Federación).

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