Mexico's Energy Industry

Mexico: rebalancing energy policy

The implementation of Mexico’s Energy Reform in 2013–2014 marked a turning point for the country’s hydrocarbons sector. The reform reshaped Petróleos Mexicanos (Pemex), introduced new regulators and opened large parts of the oil and gas value chain to private and foreign investment. Between 2015 and 2018, Mexico carried out multiple licensing rounds and contract awards, and Pemex launched a farmout programme to bring in partners for technically complex or capital-intensive acreage.

However, the momentum of the reform slowed significantly from 2019 onwards as policy shifted toward strengthening the role of state companies. New competitive bid rounds were largely paused, Pemex’s farmout strategy was shelved and the government prioritised production from Pemex-operated areas while seeking to increase refining self-sufficiency. Recent reforms under President Claudia Sheinbaum have continued to emphasise the strategic role of Pemex and the state, while signalling scope for private participation through partnerships under revised rules.

Mexico’s greatest remaining exploration potential lies offshore, particularly in the Gulf of Mexico, where large areas remain underexplored relative to the basin’s overall prospectivity. At the same time, one of the most important structural trends shaping the energy system is rising demand for natural gas, driven primarily by power generation and industry. Mexico has become increasingly dependent on US pipeline gas, and while the country has expanded its transportation network over the past decade, constraints in storage, redundancy and regional connectivity continue to create bottlenecks. CENAGAS operates the national integrated gas pipeline system, which stretches more than 10,000 kilometres.

Despite being a crude exporter, Mexico has long relied heavily on imported refined products. The government has sought to reduce this dependence through refinery rehabilitation and by building the Olmeca (Dos Bocas) refinery, a 340,000-bpd plant that has been ramping up operations through 2024 and 2025. Meanwhile, the downstream retail market has become more competitive since price liberalisation in 2017, with international brands and independent retailers entering the sector, even as Pemex remains the dominant player and government policy continues to influence pricing and supply dynamics.