BASHAM NEWS

BILL OF AMENDMENTS TO THE HYDROCARBONS LAW.

Mexico City, April 28th, 2021.

 

On April 20th, 2021, a bill of amendments was submitted to the Chamber of Deputies to modify a key transitory article of the Hydrocarbons Law.

With the referred bill of amendments, the main purposes of the ruling party, which submitted the bill of amendments, is: (i) to strengthen the State-Owned Productive Company known as PEMEX (“PEMEX”) and (ii) to avoid and delete the current restrictions imposed by the Energy Regulatory Commission (“CRE”) to PEMEX in connection with the asymmetric regulation of PEMEX in firsthand sales of oil products and petrochemicals.

The asymmetrical regulation imposed on PEMEX as of 2014 prevented and limited PEMEX from continuing having a dominant position in the market until different economical agents, meaning companies engaged in such activities, could participate and promote a more competitive environment in Mexico in such industry.

As per the consideration included in the bill of amendments and the resolution issued by the Energy Commission of the Chamber of Deputies, since as of this date there are competitive conditions in the oil market, there is no need to limit PEMEX to the referred asymmetrical conditions.

It is worth mentioning that under the referred bill of amendments, any sale made by PEMEX, its State-Owned Subsidiaries would be considered as a commercialization activity.

Additionally, if approved, CRE would have a timeframe of 30 natural days to leave without any effects any administrative provision, regulation, guideline, and resolutions related to the imposition of asymmetrical restrictions to PEMEX.

Although the bill of amendments was already approved by the Chamber of Deputies on April 21st, 2021, the bill shall now be approved by the Mexican Senate, which discussions are expected to take place within these days.

Should the amendments be approved by the Mexican Congress and published in the Federal Official Gazette, such approval would open the possibility to: (i) file an action of unconstitutionality (accion de inconstitucionalidad) which could be filed either by 33% of the Senators or Deputies or by those individuals / entities allowed as per article 105 of the Federal Constitution, or (ii) amparo appeals (juicios de amparo) by any individual / company suffering any negative or adverse effects from the new legal provisions included in the Hydrocarbons Law or any amendments to the applicable regulations derived from such modifications.

For the moment, it will be relevant to follow up any outcomes and the discussions expected to be held in the Senate in connection with this bill of amendments, however, the proposed modifications have already raised numerous questions in connection to the fact that deleting the asymmetrical regulations for PEMEX would open, again, the possibility of having a major State Oil Company controlling the market.

 

The lawyers of the energy, infrastructure and administrative area at firm are available for any questions or comments on the above.

 

S I N C E R E L Y,

 

Juan Carlos Serra

serra@basham.com.mx

 

Rodolfo Barreda

rbarreda@basham.com.mx

 

Jorge Eduardo Escobedo

jescobedo@basham.com.mx

 

Fernando Morayta

fmorayta@basham.com.mx