May 07, 2020

What is the future of the Bidding Rounds in the Mexican hydrocarbon sector?

Luigi Iacobi Pontones Brito, Rosa Martha Manjarrez Trejo, and Isaac Alejandro Castillo Cordero

Energy reform in Mexico

In 2013, the Mexican Congress approved Mexico’s Energy Reform (Reform), which promised a bright new future for national and foreign investment in the country’s energy sector. For over 80 years, all hydrocarbon exploration and extraction activities had been carried out exclusively by state-owned Petróleos Mexicanos (PEMEX). The Reform’s main purpose was to promote several amendments to the Political Constitution of the United Mexican States that would affect the existing oil participation scheme. Those changes allowed national and foreign companies to carry out hydrocarbon exploration and extraction activities throughout Mexico. Under this new scheme, a newly formed national regulatory body—the National Hydrocarbons Commission (CNH, by its Spanish acronym)—was charged with administering these oil contracts and representing the Mexican State in their execution through a bidding process, commonly referred to as “Bidding Rounds.” The Bidding Rounds were created to ensure fairness and transparency among competing companies.

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