Reforms in Mexico: Challenges and opportunities for the oil and gas sector

Mexico's oil and gas sector faces controversial legal reforms, threatening judicial independence and democracy. Companies are calling for greater cooperation to exploit national resources and reduce dependence on imports.

Share:

Olmeca refinery in Dos Bocas, Mexico

Mexico’s oil and gas sector is going through a period of significant transformation, marked by legal reforms that are raising concerns about the independence of the judiciary.
These changes, driven by the outgoing president, aim to strengthen executive control over the judiciary, which could have repercussions for the country’s democracy and its trade relations, particularly with the United States.
Against this backdrop, companies in the sector are calling for greater cooperation to exploit domestic resources and reduce dependence on foreign fuels.
The reforms, which have been ratified by a majority of local congresses, are seen by many experts as a turning point in the country’s governance.
Speaking at a forum organized by the Wilson Center, Francisca Pou Giménez, senior researcher at the Legal Research Institute of the National Autonomous University of Mexico, said,

“The reform will destroy the independence and capacity of the judicial system and erode many of the advances made in this sector over the years.”

This increased concentration of power in the hands of the executive could leave some parts of the population unprotected, according to Carlos Ugalde, director of consulting firm Integralia Consultores.
He points out that the real challenge for the bilateral relationship with the United States lies in Mexico’s inability to manage the influence of organized crime on elections.

Call for cooperation

Despite these concerns, private players in Mexico’s oil and gas sector insist on the need for greater collaboration to develop the country’s vast resources.
At a national oil and gas convention, participants pointed out that other countries in the region, such as Guyana and Brazil, have been successful in attracting investment thanks to favorable policies.
Craig Kelly, senior director of international government affairs at ExxonMobil, noted that the stability offered by the Guyanese government has been crucial in attracting more than $50 billion in oilfield development investment.
Opportunities in Mexico often lie in hard-to-reach areas, such as deep water, requiring considerable investment that companies cannot make on their own.
Stephane Drouaud, Vice President of the Trion project at Woodside Energy, said: “We need to identify the key drivers and work together. We can’t do it alone.”
The Trion project is currently the only deepwater oil project under development in the country.

Focus on gas

Convention participants also called on the government to examine the development potential of unconventional deposits, particularly those related to gas.
According to data from the National Hydrocarbons Commission, Mexico has around 110 billion barrels equivalent of prospective resources, of which 65 billion barrels are in unconventional deposits.
Marco Vera, GE Vernova’s head of Latin America and the Caribbean, stressed that the country should explore all its options, including unconventional and deepwater deposits.
Mexico’s natural gas production of around 2 billion cubic feet per day is mainly used in Pemex’s upstream operations.
However, total gas demand in the country is expected to grow at a compound annual growth rate of 1.6% until 2050, according to S&P Global Commodity Insights.
This growth will be driven primarily by demand from the power sector, which is expected to reach 8.2 billion cubic feet per day by 2050.
As domestic production declines and demand increases, pipeline gas imports from the USA are expected to account for an increasing share of total supply.

Challenges and opportunities

Mexico’s growing dependence on natural gas imports poses risks to the country’s energy security.
Carlos Pascual, senior vice president for global energy and international affairs at Commodity Insights, warned that “no country in the world, with the exception of North Korea, develops its energy sector solely with government funds.”
This underscores the importance of a collaborative approach to mobilizing the investment needed to develop national resources.
Mexico’s oil and gas companies are at a crossroads.
While legal reforms could restrict their ability to operate effectively, the need for greater cooperation to develop national resources is more pressing than ever.
Market players have to navigate a complex environment, where political stability and the ability to attract foreign investment will be decisive for the future of the sector.

Talks between European Union member states stall on the adoption of the eighteenth sanctions package targeting Russian oil, due to ongoing disagreements over the proposed price ceiling.
Three new oil fields in Iraqi Kurdistan have been targeted by explosive drones, bringing the number of affected sites in this strategic region to five in one week, according to local authorities.
An explosion at 07:00 at an HKN Energy facility forced ShaMaran Petroleum to shut the Sarsang field while an inquiry determines damage and the impact on regional exports.
The Canadian producer issues USD 237 mn in senior notes at 6.875 % to repay bank debt, repurchase USD 73 mn of 2027 notes and push most of its maturity schedule to 2030.
BP revised upwards its production forecast for the second quarter of 2025, citing stronger-than-expected results from its US shale unit. However, lower oil prices and refinery maintenance shutdowns weighed on overall results.
Belgrade is engaged in complex negotiations with Washington to obtain a fifth extension of sanctions relief for the Serbian oil company NIS, which is majority-owned by Russian groups.
European Union ambassadors are close to reaching an agreement on a new sanctions package aimed at reducing the Russian oil price cap, with measures impacting several energy and financial sectors.
Backbone Infrastructure Nigeria Limited is investing $15bn to develop a 500,000-barrel-per-day oil refinery in Ondo State, a major project aimed at boosting Nigeria’s refining capacity.
The Central Energy Fund’s takeover of the Sapref refinery introduces major financial risks for South Africa, with the facility still offline and no clear restart strategy released so far.
PetroTal Corp. records production growth in the second quarter of 2025, improves its cash position and continues replacing key equipment at its main oil sites in Peru.
An explosion caused by a homemade explosive device in northeastern Colombia has forced Cenit, a subsidiary of Ecopetrol, to temporarily suspend operations on the strategic Caño Limón-Coveñas pipeline, crucial to the country's oil supply.
Occidental Petroleum announces a decrease in its production in the Gulf of Mexico in the second quarter, citing third-party constraints, extended maintenance, and scheduling delays.
U.S. legislation eases access to federal lands for oil production, but fluctuations in crude prices may limit concrete impacts on investment and medium-term production, according to industry experts.
Permex Petroleum Corporation has completed a US$2mn fundraising by issuing convertible debentures, aimed at strengthening its cash position, without using intermediaries, and targeting a single institutional investor.
Petróleos de Venezuela S.A. (PDVSA) recorded $17.52bn in export sales in 2024, benefiting from increased volumes due to U.S. licences granted to foreign partners, according to an internal document seen by Reuters.
Commissioning of a 1.2-million-ton hydrocracking unit at the TANECO site confirms the industrial expansion of the complex and its ability to diversify refined fuel production.
Oil stocks in the United States saw an unexpected rise of 7.1 million barrels as of July 4, defying analyst expectations of a decline, according to the U.S. Energy Information Administration (EIA).
Petro-Victory Energy announces the completion of drilling operations for the AND-5 well in the Andorinha field, Brazil, with positive reservoir results and next steps for production.
The Colombian prosecutor’s office has seized two offices belonging to the oil company Perenco in Bogotá. The company is accused of financing the United Self-Defense Forces of Colombia (AUC) in exchange for security services between 1997 and 2005.
Indonesia has signed a memorandum of understanding with the United States to increase its energy imports. This deal, involving Pertamina, aims to diversify the country's energy supply sources.