Mexico Publishes Regulations of the Hydrocarbons Sector Law

Mexico's Executive Branch, through the Ministry of Energy (Secretaría de Energía or SENER), on Oct. 3, 2025, published in the Federal Register (Diario Oficial de la Federación or DOF) the Regulations of the Hydrocarbons Sector Law (Reglamento de la Ley del Sector de Hidrocarburos or RSH), aimed at implementing a new regulatory framework for hydrocarbons, under principles of strategic areas and strategic enterprises and organic simplification, pursuant to the order published in the DOF on Oct. 31, 2024.

Background

The RSH reverts both the 2014 regulation and the former Title III of the Hydrocarbons Law, consolidating into a single legal framework the provisions applicable to upstream, midstream and downstream activities. The new regulatory framework redefines the distribution of powers and authorities among SENER, the National Energy Commission (Comisión Nacional de Energía or CNE), and Petróleos Mexicanos (Pemex), while establishing new mechanisms for binding planning and operational control across the entire value chain.

Key Considerations

Sector Structure and Planning

In compliance with the Hydrocarbons Sector Law, the RSH defines the planning framework for the sector, requiring SENER and the CNE to issue, within 60 business days as of the entry into force of regulations, the binding planning provisions for the hydrocarbons sector. These provisions shall be aligned with the Hydrocarbons Sector Development Plan, prepared under the Regulation of the Planning and Energy Transition Law, which will consolidate the national policy for infrastructure expansion, social coverage and production targets.

Hydrocarbon Exploration and Extraction (Upstream)

The RSH confirms three enabling mechanisms: 1) assignments for state development, 2) assignments for joint development, and 3) contracts for the exploration and extraction of hydrocarbons. Pemex will retain priority in the allocation of assignments and may request new areas by submitting technical and social studies before SENER.

For assignments of joint development, Pemex shall justify before SENER the need for collaboration with private parties, who may participate through agreements subject to SENER's approval. The RSH grants Pemex significant flexibility to choose the operator of a joint development assignment while mandating compliance with best practices in transparency and accountability, pursuant to the company's internal guidelines. This framework allows Pemex discretion in designing its selection processes, provided they ensure objectivity, traceability and consistency with national energy planning.

Private participants should demonstrate sufficient technical and financial capacity, as well as compliance with regulatory and corporate transparency standards, as prerequisites to participate in these projects. The RSH also allows private entities to record the expected benefits of these contracts for accounting and financial purposes without affecting the state's constitutional ownership of hydrocarbons.

Transportation, Storage and Distribution (Midstream)

The RSH introduces additional criteria for permit assessment, including the applicant's compliance history and the project's consistency with the sector's binding planning instruments. This preventive approach seeks to favor operators with proven performance and operational reliability.

State-owned productive enterprises may carry out pipeline transportation or storage activities under an open access regime, though only for products owned by them. In contrast, permit holders shall offer non-discriminatory open access based on available capacity and rates authorized by the CNE.

The RSH establishes a differentiated permit term of up to 30 years for activities involving physical infrastructure (e.g., pipeline transportation or storage) and up to two years for activities without infrastructure, such as marketing. Renewals should be processed as new permits, and extensions are not permitted.

Any change of control or transfer of rights over a permit holder requires prior authorization from the CNE through a permit amendment proceeding. In practice, this change could replace the update mechanism previously contemplated by the former commission, the Energy Regulatory Commission (Comisión Reguladora de Energía or CRE), although it may also generate uncertainty among existing permit holders, as the LSH still recognizes the concept of permit updates.

Serious breaches are defined as 1) transporting or storing products without a valid permit, 2) altering product quality or quantity, and 3) breaching open access or reporting obligations. Sanctions may include monetary fines, temporary suspension or permanent revocation of the permit.

Permits issued by the CRE will continue to be valid, but their renewal and future management will now be overseen by the CNE, in accordance with Article 76 of the LSH and the relevant SENER/CNE guidelines. During this transition period, existing permit holders should keep reporting and adhering to the formats and timelines that were previously authorized.

Marketing (Downstream) and New Requirements

The RSH expressly prohibits 1) transactions between marketing permit holders (except for Pemex), unless such transactions include complementary logistics services such as transportation, storage or distribution, and 2) marketing without documented tracking. This measure aims to reduce speculative trading and strengthen product traceability and fiscal control, consistent with the recently issued CNE guidelines on labeling and technical requirements for non-pipeline transportation and distribution, published on Sept. 23, 2025.

The RSH further requires prior authorization from the CNE for 1) the commercial branding of regulated products and 2) marketing agreement models, which shall include minimum consumer protection clauses, quality and supply guarantees, and dispute resolution mechanisms. This ex ante control ensures that contractual models are reviewed and approved prior to use without prejudice against further amendments.

Furthermore, invoices issued by permit holders shall itemize the components corresponding to transportation, storage and distribution services. If a breakdown is technically unfeasible, a written justification should be provided that outlines the calculation methodology used.

Once a marketing permit is granted, the holder is required to complete the associated purchase and sale contracts within 15 business days, following the proposals submitted during the permitting process.

Final Comments

Following the transitory provisions of the RSH, the new regulation entered into force the day after its publication in the DOF. While reverting to the previous 2024 regime, the RSH temporarily preserves the validity of existing technical and administrative regulations, including administrative provisions, Official Mexican Standards (NOMs) and interpretative criteria, insofar as they do not conflict with the LSH or this regulation.

Concerning natural gas, the Mexican operator is granted with 15 business days to propose the 2025-2029 Five-Year Plan, while SENER identifies strategic and social coverage projects pending the formal adoption of the plan.

Finally, marketing permit holders should update key operational information such as area of influence, contracts, projected demand, capacity reservations, product origin and contract models within 60 business days of the regulation's entry into force, in order to strengthen regulatory oversight.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.