• Mexican Energy Sector Opportunities
  • December 11, 2008 | Authors: Roberto Arena Reyes Retana; Daniel Arando Rabago
  • Law Firms: Gardere Wynne Sewell LLP - Dallas Office; Gardere Wynne Sewell LLP - Mexico, D.F. Office
  • On Oct. 28, 2008, the Mexican Congress passed four new energy laws and amended prior legislation to give “Pemex”, the state-owned oil and gas monopoly, new regulations regarding renewable energy sources.  The reform did not accomplish most of the energy changes needed and expected from the much anticipated energy reform, but it did open certain opportunities for companies and investors.

    Pemex’ Law

    Pemex will be permitted, subject to regulations issued at a later date, to procure contracts in the oil industry without having to comply with previous rigid requirements. For example, under the new law Pemex may award or extend contracts directly without a public bid. In addition, Pemex will be permitted to grant bonuses to contractors and tap financial markets without consent from the treasury. These reforms are intended to give Pemex more flexibility in developing the oil market.

    Oil Regulatory Law

    Congress adopted regulations applicable to the use, transportation and sale of associated gas. While this type of gas previously has not been regulated, during the last two years there has been a lot of guesswork as to the applicable rule of law. The regulations seem to provide some relief.

    Renewable Energies Law

    The scope of the statute is limited to the production of electricity by means of renewable energy sources for self-supply, cogeneration, small production (less that 30MW), and IPP’s that do not involve an hydraulic source. It also creates the framework for the Mexican federal government to negotiate with the states and municipalities to expedite access to areas with high potential for renewable energies sources, promote zoning permits for such projects. The statute has the effect of forcing the federal government to build the necessary infrastructure to enable renewable energy projects to connect to the national electrical grid. This law also incorporates the Energy’s Sustainable Use and Energetic Transition Fund, which will fund renewable energy projects that are part of the national energy strategy.

    Energy’s Sustainable Use Law

    The purpose of this law is to create a new framework to incorporate a criterion of energy efficiency elements in the procurement of government contracts. The purpose of the law is to try to make the government “greener” (imposing environmental commitments such as the substitution of public transportation utilizing electrical technology rather than standard gasoline/diesel technology, the use of fluorescent energy saving lamps instead of incandescent light bulbs, etc). The law also mandates information disclosures about energy processes for companies that are considered high-consumption energy users.  Likewise, the law imposes a similar obligation to include energy consumption information for manufacturers, importers and distributors of certain equipment and household appliances. The exact types of companies subject to the disclosure have yet to be determined in the above-referenced regulations.