The upstream fiscal and regulatory outlook of Mexico has undergone many changes. Mexico had implemented different regimes for oil exploration and production, including Production Sharing Agreements (PSAs), Concession Agreements, Service Contracts and Pemex's Entitlement Regime. Private development of fields has been halted since 2018, when President Lopez Obrador put a stop to Licensing Rounds in a bid to position Pemex as the sole player in upstream development, with the company already securing a monopoly on the rest of the value chain. The reports dives into the tools and strategies used to lower Pemex's tax burden, amid serious liquidity issues.
The fiscal burden varies depending on the regime, with different cost and risk levels associated with each. The latest changes in the Pemex tax burden aimed to align taxation with the terms offered under PSAs and Concession Agreements, which were more friendly towards investment. Overall, Mexico's fiscal regime front-loads the tax burden, with a significant share of payments required before positive cash flows are achieved, worsening the risk profile of projects and impacting profitability. However, certain project types, such as Non-associated Gas, Deepwater Oil projects and those in the Chicontepec formation, have higher expected profitability due to special conditions, as detailed in the report.
“Mexico Upstream Fiscal and Regulatory Guide”, presents the essential information relating to the terms which govern investment into Mexico's upstream oil and gas sector. The report sets out in detail the contractual framework under which firms must operate in the industry, clearly defining factors affecting profitability and quantifying the state’s take from hydrocarbon production. Considering political, economic and industry specific variables, the report also analyses future trends for Mexico’s upstream oil and gas investment climate.
Understand the impact on business operations: Learn how the regulatory burden affects the cost of doing business.
Assess risks and challenges: Identify the potential risks and challenges associated with operating in the country.
The fiscal burden varies depending on the regime, with different cost and risk levels associated with each. The latest changes in the Pemex tax burden aimed to align taxation with the terms offered under PSAs and Concession Agreements, which were more friendly towards investment. Overall, Mexico's fiscal regime front-loads the tax burden, with a significant share of payments required before positive cash flows are achieved, worsening the risk profile of projects and impacting profitability. However, certain project types, such as Non-associated Gas, Deepwater Oil projects and those in the Chicontepec formation, have higher expected profitability due to special conditions, as detailed in the report.
“Mexico Upstream Fiscal and Regulatory Guide”, presents the essential information relating to the terms which govern investment into Mexico's upstream oil and gas sector. The report sets out in detail the contractual framework under which firms must operate in the industry, clearly defining factors affecting profitability and quantifying the state’s take from hydrocarbon production. Considering political, economic and industry specific variables, the report also analyses future trends for Mexico’s upstream oil and gas investment climate.
Scope
Overview of current fiscal terms governing upstream oil and gas operations in Mexico
Assessment of the current fiscal regime’s state take and attractiveness to investors
Charts illustrating the regime structure, and legal and institutional frameworks
Detail on legal framework and governing bodies administering the industry
Levels of upfront payments and taxation applicable to oil and gas production
Information on application of fiscal and regulatory terms to specific licenses
Outlook on future of fiscal and regulatory terms in Mexico
Reasons to Buy
Gain insights into the regulatory landscape: Get a comprehensive overview of the fiscal and regulatory environment.Understand the impact on business operations: Learn how the regulatory burden affects the cost of doing business.
Assess risks and challenges: Identify the potential risks and challenges associated with operating in the country.
Table of Contents
1 Executive Summary
3 Key Fiscal Terms - Pemex Entitlement & Service Contracts
4 Key Fiscal Terms - Production Sharing Agreement & Royalty and Tax
5 Regulation and Licensing
6 Appendix
List of Tables
List of Figures
Companies Mentioned (Partial List)
A selection of companies mentioned in this report includes, but is not limited to:
- Petroleos Mexicanos (Pemex)
