New energy regulations

1. Background

Due to the constitutional reforms regarding strategic areas and companies, and organizational simplification, which took effect at the end of 2024, the following energy laws were published in Mexico on March 18, 2025 (the "New Energy Laws"):¹

1. Electricity Sector Law (Ley del Sector Eléctrico);
2. Hydrocarbons Sector Law (Ley del Sector Hidrocarburos);
3. National Energy Commission Law (Ley de la Comisión Nacional de Energía);
4. Law of the State-owned Public Company, Federal Electricity Commission (Ley de la Empresa Pública del Estado, Comisión Federal de Electricidad);
5. Law of the State-owned Public Company, Petróleos Mexicanos (Ley de la Empresa Pública del Estado, Petróleos Mexicanos);
6. Energy Planning and Transition Law (Ley de Planeación y Transición Energética);
7. Biofuels Law (Ley de Biocombustibles); and
8. Geothermal Law (Ley de Geotermia).

The New Energy Laws aim to (i) enhance State control, regulation and supervision over Mexico's electricity and hydrocarbons' industries, and (ii) increase the Federal Electricity Commission's (Comisión Federal de Electricidad, "CFE") and Petróleos Mexicanos' involvement in such sectors. For further details on the content and scope of the New Energy Laws, please refer to our prior client alert: https://www.whitecase.com/insight-alert/new-energy-laws

2. Issuance of the new energy regulations

In such regard, on October 3, 2025, the Mexican federal government published the following Regulations for the New Energy Laws (collectively, the "New Energy Regulations") in the Federal Official Gazette (Diario Oficial de la Federación):

• Regulation of the Electricity Sector Law (Reglamento de la Ley del Sector Eléctrico);
• Regulation of the Hydrocarbons Sector Law (Reglamento de la Ley del Sector Hidrocarburos);
• Regulation of the Geothermal Law (Reglamento de la Ley de Geotermia);
• Regulation of the Biofuels Law (Reglamento de la Ley de Biocombustibles);
• Regulation of the Energy Planning and Transition Law (Reglamento de la Ley de Planeación y Transición Energética); and
• Amendments to the Regulation of the Hydrocarbon Revenues Law (Modificaciones al Reglamento de la Ley de Ingresos sobre Hidrocarburos).

The New Energy Regulations set forth the specific rules governing the performance of activities throughout the value chain of the electricity and hydrocarbons' industries, as well as in the areas of energy planning and transition, geothermal energy, and biofuels, all in accordance with the principles established under the New Energy Laws.

Among these, the Regulation of the Electricity Sector Law and the Regulation of the Hydrocarbons Sector Law are of particular importance, as they govern activities such as generation, storage, transmission, distribution, and the commercialization of electricity, and surface exploration and reconnaissance, exploration and extraction, refining, processing, importation, exportation, commercialization, transportation, formulation, storage, distribution, and retail of hydrocarbons, respectively.

Below is a summary of the main aspects of the Electricity Sector Law and the Regulation of the Hydrocarbons Sector Law:

3. Regulation of the Electricity Sector Law

• Binding Planning. The Electricity Sector Law establishes that planning within the electricity sector shall be binding, and that the Mexican State shall have priority over private parties in performing electricity generation and commercialization activities. The Regulation of the Electricity Sector Law provides that the Electricity Sector Development Plan will be the means for developing and implementing such binding planning. The plan must outline the necessary actions to ensure that the relevant projects are timely implemented, fully coordinated with other energy-planning instruments, and relate to medium-term and long-term horizons. During the last four months of 2025, private parties may submit proposals for generation, industrial, productive, or infrastructure projects in the electricity sector to the Ministry of Energy (Secretaría de Energía, "SENER"), for consideration to be included in this binding planning process.
• State Control and Prevalence. With respect to power generation, the Electricity Sector Law provides that the Mexican State must generate at least fifty-four percent (54%) of the average electricity injected into the grid during a calendar year. The Regulation of the Electricity Sector Law establishes that no later than the last business day of February of each year, SENER must calculate (pursuant to the methodology to be issued by SENER in such regard), the State's participation in generation as the quotient from dividing the Electricity Generated and Injected by the State² by the Total Electricity Generated and Injected³, multiplied by one hundred. Based on this evaluation, SENER shall identify the additional generation, transmission, and other electric infrastructure capacity that must be developed by the State and incorporate such projects into the Electricity Sector Development Plan.
• Electric Power Generation. The Regulation of the Electricity Sector Law expands upon the generation structure established in the Law, including the following:
  • Generation for the Wholesale Electricity Market. Private parties may develop projects under this structure, so long as such projects do not conflict with the binding planning of the electricity sector. The National Energy Control Center (Centro Nacional de Control de Energía, "CENACE") shall publish the maximum amount of interconnection capacity available to the National Transmission Grid without reinforcement, in order to receive interconnection requests from private entities seeking to develop new power plants.

  • Mixed Development Structure (Long-Term Production and Mixed Investment). The Regulation of the Electricity Sector Law provides that private participants (which may include individuals, legal entities, or trusts) engaged in these investment structures must meet technical, operational, performance, financial, and experience-based requirements, and will be chosen through a corresponding selection procedure. All such projects must contribute to the needs of the National Electricity System, ensure optimal conditions for the State, and have a fixed term sufficient to allow for the full amortization of the total investment made, which in no event may exceed 30 years. Projects may be implemented through special-purpose legal or financial vehicles, in accordance with applicable law. These vehicles must include exit provisions for all parties at any time, dispute resolution clauses specifying the applicable dispute resolution mechanics, and provisions for the transfer of assets upon expiration or early termination of the joint venture, which shall always give priority to and be optional for the State.

    In the case of Mixed Investment Schemes, the Regulation of the Electricity Sector Law provides that the direct or indirect participation of CFE, of at least fifty-four percent (54%) as established in the Law, shall be held in the common share capital (or equivalent interest) of the legal or financial vehicle used for such purposes. This participation must be formalized no later than 180 business days following the project's commercial operation date and may take the form of equity contributions⁴or a joint venture⁵, whether in cash, in-kind, intangible, or any other means agreed among the parties. The projects under this structure may be implemented through trusts, joint ventures (asociaciones en participación), legal entities, or other legal or financial vehicles. The associated infrastructure, as well as the related assets and rights, may be pledged or otherwise have liens granted thereover to secure financing or other obligations incurred for the project's development, operation, or maintenance, in accordance with the applicable vehicle's terms.

    In the case of Long-Term Production Schemes, the contracts must provide capacity payments corresponding to the generation capacity made available to CFE, as well as for payments for the electric power and associated products delivered to CFE, with payments commencing upon the commercial operation of the respective power plant. The Regulation of the Electricity Sector Law also provides for penalties for unavailability of the power plant attributable to the permit holder.

• Announcement for the Development of Power Plants. Within 60 business days following publication of the Regulation of the Electricity Sector Law, SENER must issue an announcement in the Federal Official Gazette, calling for private parties to submit generation permit applications for the development of power plants deemed strategic and priority projects under the binding planning of the electricity sector through 2030. The announcement must specify, at a minimum, capacity requirements, zones, and technologies for the development of power plants, as well as requirements and deadlines for the submission of new generation permit applications, and, where applicable, migration procedures for permits previously granted under the former Public Electricity Service Law (Ley del Servicio Público de Energía Eléctrica) and the Electricity Industry Law (Ley de la Industria Eléctrica) that cover the operation of such plants.
• Legacy Permits Subject to Revocation Procedures. The Regulation of the Electricity Sector Law provides that holders of permits granted under the Public Electricity Service Law (Ley del Servicio Público de Energía Eléctrica) that are currently subject to administrative revocation proceedings or fall within any grounds for revocation may, at the National Energy Commission's (Comisión Nacional de Energía, "CNE") discretion, be subject to the imposition of a fine in lieu of revocation, provided that before the administrative resolution is issued, they request migration to one of the legal schemes established under the Electricity Sector Law.
• Energy Storage. The Regulation of the Electricity Sector Law provides that electric energy storage systems may jointly participate in generation and commercialization activities, whether associated or not with load centers or power plants, or be integrated as part of the infrastructure for the Public Electricity Transmission and Distribution Service. For further information on the current regulation of energy storage systems, please refer to our client alert: https://www.whitecase.com/insight-alert/new-provisions-integrating-electric-energy-storage-systems-national-electric-system. However, new provisions on energy storage will be issued within the next 180 days.
• Self-Supply. The Electricity Sector Law replaced the concept of "Isolated Supply" with "Self-Supply", which is defined as the use of the production from a power plant with a capacity equal to or greater than 0.7 MW to meet the on-site or local needs of a generation permit holder, either through an interconnected self-supply scheme (allowing the injection of surplus electricity into the grid and the acquisition of electricity shortages from the grid) or through an isolated self-supply scheme. The Regulation of the Electricity Sector Law provides that, for purposes of this scheme, "on-site or local needs" shall mean the electricity demand required by the consumption centers associated with the self-supply users⁶ and, as applicable, by the holder of the electricity generation permit under the self-supply modality, which is satisfied without transmitting or distributing electricity through the National Transmission Grid or the General Distribution Grids. It is important to note that the general administrative provisions on self-supply are still pending issuance, which will provide further detail on the characteristics of this scheme.
• Social Impact Statement for the Energy Sector. The Regulation of the Electricity Sector Law provides that infrastructure projects for the generation of electricity through the isolated self-supply modality are exempt from filing the Social Impact Statement for the Energy Sector, provided that their generation capacity does not exceed 20 MW.
• Update of the Wholesale Electricity Market Guidelines. The Regulation of the Electricity Sector Law provides that SENER shall coordinate the update of the current Wholesale Electricity Market Guidelines (Reglas del Mercado Eléctrico Mayorista), with the participation of the CNE, CENACE, and representatives of the private sector, in order to align such rules with the new principles established in the Electricity Sector Law and its Regulation.

4. Regulation of the Hydrocarbons Sector Law

4.1. Exploration and extraction

• Assignments for Exploration and Extraction. The Hydrocarbons Law created new types of assignments allowing Petróleos Mexicanos to carry out exploration and extraction activities, primarily consisting of assignments for self-development and for joint development.
  • Assignments for Self-Development. Under assignments for self-development, Petróleos Mexicanos may exclusively carry out exploration and extraction activities. However, Petróleos Mexicanos may enter into service contracts with private parties under arrangements that allow for greater productivity and profitability. The Regulation of the Hydrocarbons Law establish the procedure for Petróleos Mexicanos to request the granting of an assignment, as well as for its relinquishment, amendment and revocation.
  • Assignments for Joint Development. Under assignments for joint development, Petróleos Mexicanos may supplement its technical, operational, financial or execution capabilities through the execution of a contract with one or more private parties. Such contract shall establish the participation interest of Petróleos Mexicanos and of the private party in the corresponding area (it being understood that Petróleos Mexicanos must maintain a participation interest equal to or greater than forty percent (40%)), the undertakings of each party, and the allocation of risks, among other aspects. Similarly, the Regulation of the Hydrocarbons Law establishes the procedure for the granting and amendment of these assignments, as well as for them to be changed into an assignment for self-development. It is noteworthy that, in order for these assignments to be granted, Petróleos Mexicanos must justify the need to supplement its technical, operational, execution, financial or experience capabilities with those of private parties.
• Bidding Processes for Exploration and Extraction Contracts. The Regulation of the Hydrocarbons Law provided that SENER may request authorization from the Ministry of Finance and Public Credit (Secretaría de Hacienda y Crédito Público) to call for a bidding process to award contracts through an exploration and extraction contract, which remains generally consistent with the bidding procedures established under the now-repealed Hydrocarbons Law. The exploration and extraction contracts retain their existing form as service contracts, profit-sharing contracts, production-sharing contracts and license contracts, which may also be structured as a combination thereof.

4.2. Permits

• Term of the Permits. The Regulation of the Hydrocarbons Sector Law establishes maximum, non-extendable terms for the permits of the regulated activities. In particular, we note the following:
  • Crude Oil: Treatment, refining, transportation through pipelines, and storage: up to 30 years. Transportation by means other than pipelines: up to 20 years.
  • Natural Gas: Processing, transportation through pipelines, storage and distribution through pipelines: up to 30 years. Liquification, regasification, compression, decompression, transportation by means other than pipelines, and distribution by means other than pipelines: up to 20 years.
  • Oil Products (Petrolíferos): Storage, transportation through pipelines, and distribution by means other than pipelines: up to 30 years. Retail sales to the public: up to 20 years. Transportation by means other than pipelines and dispatch for self-consumption: up to 15 years. Blending / formulation: up to 5 years.
  • Liquified Petroleum Gas (LP Gas): Storage, transportation through pipelines, and distribution by means other than pipelines: up to 30 years. Retail sales to the public and distribution through plants: up to 20 years. Distribution by means other than pipelines and dispatch for self-consumption: up to 15 years.
  • Petrochemicals: Storage and transportation through pipelines: up to 30 years. Transportation by means other than pipelines: up to 15 years.
  • Commercialization of Crude Oil, Natural Gas, LP Gas, Oil Products and Petrochemicals: up to two years.
  • Import and Export of Crude Oil, Natural Gas, LP Gas, Oil Products and Petrochemicals: up to five years.

Upon the expiration of the applicable term, a new permit must be requested.

• Change of Control and Shareholding Structure. The Regulation of the Hydrocarbons Sector Law provides that a change of control in the shareholding structure of the permit holder modifies the initial conditions under which the permit was granted. Therefore, any change of control requires the evaluation and approval of SENER or the CNE, as applicable.
• Grounds for the Non-Granting, Amendment, or Assignment of Permits. The Regulation of the Hydrocarbons Sector Law expressly set forth the circumstances under which SENER or the CNE may deny the granting, amendment or assignment of permits. Such circumstances include, among others, when the change or request would (i) promote or allow the performance or continuation of illicit activities related to hydrocarbons, (ii) when there are existing non-compliances under other permits, or (iii) when the applicant has previously carried out activities without the corresponding permit.

4.3. Permitted activities

• Commercialization of Hydrocarbons. The Regulation of the Hydrocarbons' Sector Law set forth relevant aspects regarding the commercialization of hydrocarbons, including the following:
  • Separate commercialization permits must be granted for each category of product to be sold (hydrocarbons, oil products or petrochemicals).
  • Traders of oil products (other than LP Gas) may only sell products under a trademark registered with the CNE.
  • Additionally, such traders are subject to stricter obligations regarding the submission of information and documentation to the CNE in connection with conducting activities for which their permit has been granted.
  • Such commercialization will be subject to terms and conditions for the provision of services, similar to those applicable to the transportation and distribution through pipelines, operation of integrated systems, and storage of hydrocarbons. Furthermore, it is established that commercialization contracts must include a minimum set of provisions, containing specific legal, technical and commercial clauses.
• Dispatch for Self-Supply. The Regulation of the Hydrocarbons Sector Law introduces a new concept of dispatch of refined products for self-supply, which establishes the requirement to obtain a permit to perform this activity. The holders of such permits may not sell, assign, convey or otherwise transfer refined products to third parties, nor may they issue or generate invoices to third parties in connection with the sale of refined products, as this activity is intended solely for the permit holder's own consumption of hydrocarbons.
• Transportation and Storage of Petrochemicals. The Regulation of the Hydrocarbons Sector Law provides that transportation other than by means of pipelines and the storage of petrochemicals must each obtain the corresponding permits. Previously, a transportation permit was only required when transported through pipelines, and a storage permit was required only when linked to a pipeline system.
• Regulation of Consideration, Prices and Tariffs. The Regulation of the Hydrocarbons Sector Law provides that, for all regulated activities within the hydrocarbons sector, the CNE may issue regulations regarding the applicable consideration, prices or tariffs, in order to protect the interests of end users and ensure the well-being of the general population, it being understood that such regulation must allow the permit holder to cover its costs and obtain a reasonable profit.
• Traceability. The Regulation of the Hydrocarbons Sector Law provides that digital tools, technological systems, electronic applications or other mechanisms may be established, which permit holders must use to report information, upload documentation, allow access to databases, location data, or any other relevant information, in order to monitor and determine the traceability of hydrocarbons. In addition, permit holders are required to implement control measures and procedures to prevent and detect acts, omissions, or operations that may constitute criminal offenses related to hydrocarbons, in connection with the traceability of products.
• Electronic Information-Reporting Platform. The Regulation of the Hydrocarbons Sector Law provides that SENER and the CNE must establish procedures enabling permit holders to statistically register commercial transactions, including managed volumetric controls, quantities, qualities and applied prices, in order to monitor hydrocarbons inflows and outflows within the permitted systems, as well as the evolution of the markets.

_{1 Amendments to the Law of the Mexican Petroleum Fund for Stabilization and Development, the Law of Income on Hydrocarbons and the Organic Law of the Federal Public Administration were also published.
2 Sum, over a given period, of the net electric power generation injected into the National Electricity System by power plants owned by the Federal Electricity Commission (CFE); the portion corresponding to the electricity injected by power plants in which the State holds an ownership interest; as well as that generated by power plants owned by other State entities, state governments, or the political-administrative bodies of Mexico City.
3 Sum of the net electric power generation injected into the National Electricity System by all power plants during a given period, in accordance with the methodology issued by SENER.
4 Refers to the contribution, to a legal or financial vehicle, of capital, rights of use, enjoyment, or exploitation of its assets, permits, authorizations, and any other tangible or intangible right or asset.
5 Refers to entering into an association with private parties and defining their respective rights and obligations within the corresponding legal or financial vehicle.
6 Private individual or legal entity whose consumption centers receive and use electric power from a power plant holding a generation permit under the self-consumption scheme, and which may form part of a self-consumption group.}

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_{This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.}

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