Jose Antonio Prado and Carlos Ochoa are Partners, and Alberto Esenaro Arteaga is an Associate all in our Mexico City office.
Mexico's Energy Reform of 2013 opened oil and gas sectors to private direct investment and operation. Under that reform, trading of hydrocarbons, oil and petrochemicals (oil products) opened in all value chains, even though some of those products were partially opened and no permission was required.
In August 2016, Mexico's Energy Regulatory Commission, or Comisión Reguladora de Energía (CRE), issued criteria for determining what constitutes trading of oil products and, therefore, when a trading permit is required.
In December 2016, the CRE listed 10 scenarios and provided answers on whether or not each situation triggers the obligation to request a trading permit, for the purpose of clarity:
- A foreign company sells oil products to user at delivery point in Mexico territory and hires logistics from import to delivery points.
- A Mexican company sells and delivers custody and ownership of import products to a user in Mexican territory.
- A Mexican company sells oil products to another Mexican company for exporting with delivery in Mexican territory.
- A Mexican company offers and sells oil products to a company located in Mexico that wants to export through a Mexican company with export permit.
Permit Not Needed
- A foreign company sells and delivers custody and ownership of oil products to user before entering Mexican territory.
- A foreign company sells to user before importing, but user hires trader to take custody and transport the oil products from import/export to delivery points.
- A foreign company executes agreement abroad to supply oil products abroad that eventually will reach Mexico.
- A foreign company offers and sells to user oil products that are transferred and delivered in national waters or to a Mexican port before an import proceeding starts.
- A foreign company offers and sells oil products to a user. Property and products are delivered in a tax warehouse before importing, and foreign company pays for storage.
- A Mexican company offers and sells oil products to a foreign company. Ownership and delivery of the product is made on board when exported.
Considerations for Companies Trading Oil Products
While these criteria explain further the conditions precedent for requesting a trading permit, it is advisable to analyze on a case-by-case basis to determine the complete regulatory obligations of companies that intend to perform trading activities of oil products in Mexico.
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.