Mexico: Methodology For Measuring National Content In Mexican Hydrocarbon Sector

Last Updated: 4 December 2014
Article by Carlos Ochoa

Carlos Ochoa Valenzuela is a Senior Counsel in Holland & Knight's Mexico City office.

The Three Legal Schemes Impacted in the National Oil Industry by This Methodology Are Allocations, Contracts for Exploration, and Extraction and Permits


  • Enacted on Oct. 31, 2014, the regulations related to constitutional energy reform in Mexico complement the new legal framework of the country's hydrocarbon and electrical industry.
  • The methodology that defines the national content required in all the activities related to the Mexican energy sector has set the rules that must be followed by the potential participants.

The "Methodology for measuring national content in Allocations and Contracts for Exploration and Extraction of Hydrocarbons, as well as for the Permits in the Hydrocarbons Industry"was published on Nov. 13, 2014,in Diario Oficial de la Federación, the Mexican Official Federal Gazette (akin to the Federal Register in the United States). This methodology is part of the legal framework of the constitutional energy reform approved in December 2013. Since initial approval of the reform, secondary laws were published in August 2014, and now new regulations have been made public.

This methodology is applicable to the three legal schemes in the national oil industry: allocations, contracts for exploration, and extraction and permits. It was developed to comply with the provisions of hydrocarbons law regarding the amount of local content to be achieved in the development of exploration and extraction of hydrocarbons in Mexico – at least 25 percent in 2015 and a goal to reach 35 percent by 2025.

To establish this methodology, the Ministry of Economics used fundamental concepts of exploration and extraction activities, such as the contracted goods and services, considering their origin; the national manpower and skilled labor; training of the national workforce; investment in local and regional physical infrastructure; and transfer of technology.

Twenty-five decrees were published on Oct. 31, 2014, containing amendments and additions to existing regulations. Below is a brief study divided by sector:

1. Hydrocarbons sector:

  • The Regulation of the Hydrocarbons Law was published with the purpose of establishing the procedures for implementing the provisions of hydrocarbons law. Among others, these include the exploration and extraction of hydrocarbon, the migration process (from allocations to exploration and extraction contracts), bidding procedures, previous consultations, social impact assessments, and studies of surface use and occupation.
  • Regulation of the activities referred to by the third title of the Hydrocarbons Law aims at regulating the activities of treatment and refinement of petroleum, processing of natural gas, import and export of hydrocarbons and petroleum related products; transport, storage, distribution, compression, decompression, liquefying, regasification, commercialization and sale of hydrocarbons, petrochemicals and petroleum-related products to the public; and management of integrated systems.
  • The Regulation of the Revenue Law on Hydrocarbons was issued to establish the participation of the Ministry of Finance and Public Credit in determining economic conditions relating to tax matters on the bidding process for contracts of exploration and extraction.
  • The Regulation of Petróleos Mexicanos defines the new organization of the productive state enterprise and specifies the powers of the board of directors.
  • The Internal Regulations of the National Agency of Industrial Safety and Environment Protection in the Hydrocarbons Sector establishes the framework for action of this agency of the Ministry of Environment and Natural Resources. The ministry is responsible for industrial safety, operational safety and environmental protection in the hydrocarbons sector, including the activities of upstream, midstream and downstream in Mexico.
  • The Regulation of the General Law on Sustainable Forest Development was amended to establish the procedure modifying the land use on forest land, for carrying out activities in the hydrocarbon sector.
  • Regulation of the General Environmental Protection Law on Environmental Impact Assessment was modified to remove the direct functions of the administrative units of the Secretariat of Environment and Natural Resources regarding activities in the hydrocarbon sector to be made directly by the National Agency of Industrial Safety and Environmental Protection, especially with respect to environmental impact assessment.
  • Regulations of the General Environmental Protection Law on the Prevention and Control of Air Pollution was reformed to establish that the National Agency of Industrial Safety and Environmental Protection of the Hydrocarbons Sector will be the body in charge of regulation of atmospheric emissions concerning activities relating to the hydrocarbon sector.
  • Amendments and additions were made to the Regulations of the General Law for the Prevention and Management of Waste to establish that the National Agency for Industrial Safety and Environmental Protection of the Oil Sector will be responsible to inspect, monitor and, where appropriate, penalize activities taking place in the sector regarding the handling of hazardous waste.
  • Various provisions of the Regulations of the General Environmental Protection Law with respect to Land Use Realigment were amended to establish that all activities related to the land use realignment to the hydrocarbon sector will pertain to the federal level. Concretely, this means that it is not allowed in this industry to enter into agreements with states or municipalities and that their regional programs can not regulate the activities of the hydrocarbon industry.
  • The Regulation of the General Environmental Protection Law with respect to Registration of Emissions and Pollutants Transfer was amended to establish that the activities regulated by this legislation, when related to the hydrocarbon sector, falls within the responsibilities of the National Agency of Industrial Safety and Environmental Protection in the Hydrocarbons Sector.
  • The Regulations of the General Environmental Protection Law with respect to Self-regulation and Environmental Audits was reformed to establish that its application in the case of activities within the hydrocarbon sector corresponds to the National Agency of Industrial Safety and Environmental Protection in the Hydrocarbons Sector.
  • Internal Regulations of the Ministry of Environment and Natural Resources was amended to consider the National Agency of Industrial Safety and Environmental Protection in the Hydrocarbons Sector within the administrative bodies of the secretariat and to establish the general faculties needed for the performance of its functions in regards to the framework of the energy reform.
  • Amendments to the Internal Regulations of the Ministry of Economy were made to create the Unit of National Content and Development of Productive Chains and Investment in the Energy Sector, with the main objective to establish the goal of reaching local content as laid out in the terms of the provisions by the Hydrocarbons Law.

2. Electricity sector:

  • Regulation of the Law of Geothermal Energy aims to establish the requirements, procedures and other acts that allow the implementation of activities concerning the exploration and exploitation of geothermal resources foreseen under the Geothermal Energy Act, for the use of the subsurface thermal energy within the limits of the national territory.
  • The Regulation of the Law of the Federal Electricity Commission polices the internal organization of the commission in relation to the new legal structure of this productive state enterprise.
  • Publication of the Guidelines establishing criteria for granting Clean Energy Certificates and requirements for acquisition intends to establish the criteria and requirements for the issuance of certificates by the Energy Regulatory Commission. These clean energy certificates are contemplated in the Electricity Industry Act and intended for clean generators and suppliers. In this regard, the commission has yet to determine the means and procedure for granting certificates.

3. Amendments/additions applicable for both sectors:

  • The Regulation of the Public Private Partnerships Law was amended to establish the prohibition of productive state enterprises to enter into public-private partnerships to participate in the exploration and extraction of hydrocarbons.
  • The Regulation of the Federal Budget and Treasury Accountability Law was amended to establish various provisions relating to the budget of Petróleos Mexicanos, highlighting the management of its deficit – which should be zero – as well as the allocation of resources to the Mexican Petroleum Fund.
  • Amendments were made to the Internal Regulations of the Ministry of Finance and Public Credit to create the administrative units responsible for implementing the energy reform in the scope of the Secretariat of Finance and Public Credit.
  • Amendments to the Internal Regulations of the Ministry of Agricultural, Territorial and Urban Development – the land use unit for projects in energy and physical investment of the Miners Funds – was created and will be responsible to propose actions that would facilitate the resolution of conflicts between assignees, contractors, generators, transporters and distributors of energy and the owners of the land; monitor and track the record of notifications to initiate negotiations to submit to the secretariat assignees, contractors, generators, transporters and distributors of energy-related products to reach an agreement with the owners of the land to be used for carrying out the exploration and extraction of hydrocarbons; transport by pipeline of hydrocarbons, petroleum or petrochemicals as well as surface exploration and generation, transmission and distribution of electrical power.

Finally, for the proper implementation of the energy reform in the electricity sector, the issuance of the following is still lacking:

  • basis of the electricity market
  • operative provisions of the market
  • application forms for permits for generation and others established by the Electricity Industry Act

In the case of the hydrocarbon industry, it is important to carefully follow the bidding process because the applicable legal framework has not formally established some determining factors, such as the choice of the contractual scheme through which private companies may participate.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions