natural gas in mx galera

Academia MexicanadeEnergía,A.C.

Energy:Science,TechnologyandManagement.Vol.1,No.1

Dateofpublication:January,2021.Dateofreception:November,30,2020,dateofacceptation,December,29,2020.

Digital Object Identifier XX.XXXX/XXXX

v INVITATIONPAPER

Legal Regime of Natural gas industry in Mexico José Juan González Márquez, Ivett Montelongo Buenavista, Ana María Pacheco Ruiz

Universidad Autónoma Metropolitana, Azcapotzalco, CDMX, 02120, Mexico ABSTRACT. This article analyzes the legal regime applicable to natural gas industry in Mexico as of the constitutional reform approved in 2013, which allowed the participation of the private sector in all stages of the hydrocarbon industry chain of value. The analysis includes the explanation of the role played by natural gas in Mexico's energy transition, as well as the regime of allocations and contracts that allow private industry to participate in the strategic activities of the natural gas industry; also the regime of authorizations and permits to which the development of activities do not reserved to the nation are subject. In addition to the above, the study also discusses the state's rectory over this sector through the energy regulatory institutions and how various specific aspects of the sector are regulated in Mexico. KEY WORDS: Natural gas industry, Mexico, Legal regime

I. structure of the country's energy matrix and policy in Mexico.

In Mexico, energy production and supply still depending primarily on fossil fuels (gas, oil, and coal). According to the National Energy Balance of 2018, by that year hydrocarbons contributed 82.87% to the production of primary energy, almost two percentage points less than what was observed in 2017[1]. The participation of oil in that percentage was 62.4%, natural gas 19.7%, and coal contributed 4.3%; 10.4% of renewables, 2.4% of nuclear energy, and 0.8% of condensates. On the other hand, 85% of the gross domestic energy supply came from hydrocarbons, where natural gas from hydrocarbons, where natural gas and condensates

1 Availabe at

https://www.gob.mx/cms/uploads/attachment/file/528054/Balance_Nacional_de_Energ_a_2018.pdf

2 SeFCEtaría de Energía, “Balance Nacional de Energía 2017” México,

2018. Available at: <https://www.gob.mx/cms/uploads/attachment/file/414843/Balance_Nacional_de_Energ_a_2017.pdf>.

represented 47% of the total supply, followed by oil and petroleum products with 38%[2].

On the other hand, in 2020, Mexico's proven natural gas reserves amounted to 9,286 billion cubic feet [3], which, according to statistics from the Ministry of Energy, places Mexico 22nd among the countries with the largest natural gas reserves in the world[4].

Despite the above, Mexico is considered as an importer of natural gas, because it is still cheaper to buy it abroad than to extract and process it into the country. According to available data, 67% of the natural gas consumed in Mexico

3 Available at https://hidrocarburos.gob.mx/media/3652/reporte_reservas_recursos2020.pdf

4 Available at http://sie.energia.gob.mx/movil.do?action=cuadro&cvecua=DIIE_C35_ESP

JoséJuanGonzálezMárquez,et.al.Energy:Science,technologyandmanagement

AcademiaMexicanadeEnergía,A.C.

comes from the United States[5]. The extraction of natural gas in Mexico has decreased at the rhythm of 3.7% annually since a decade ago[6], while, according to official data, during the last ten years, Mexican imports of this hydrocarbon from the United States of America have tripled to reach 4.9 billion cubic meters per day[7].

It is difficult to reverse this trend. In fact, in 2019 Mexico imported 5.54 billion cubic feet of natural gas per day, which means an increase of 3.4% compared to 2018[8].

This scenery could only change to the extent that extracting natural gas from Mexican wells becomes more profitable[9]. The role of legal frame could be crucial to leas that change. The total liberalization of the natural gas industry through the constitutional reform of 2013 as well as the secondary legislation that shapes it and various administrative programs that have been enacted based on it, seek precisely to achieve this goal.

In that regard, in 2016 the Mexican government issued the "Public Policy for the Implementation of the Natural Gas Market" to establish a public policy that promotes the development of a competitive natural gas market, which will require the participation of private and public investment to generate multiple suppliers and buyers[10].

Likewise, in 2018, the Mexican government announced a program to renovate a series of the Federal Commission of Electricity (FCE) plants that were close to leaving the system and to rehabilitate the hydroelectric plants[11]. However, while these efforts would help to improve the country's power generation from different sources, it is not enough to reduce the demand for natural gas.

On the other hand, it is worth noting that the new natural gas infrastructure began to take on greater relevance after the enactment of the National Infrastructure Program 2014-2018

5 Available at https://www.eleconomista.com.mx/empresas/Mexico-

duplico-sus-compras-de-gas-natural-a-Estados-Unidos-en-un-lustro-20200226-0018.html

6 SubseFCEtaría de Hidrocarburos Dirección General de Exploración y Extracción de Hidrocarburos, “Indicadores de Exploración y Extracción de Hidrocarburos septiembre 2018”. Available at: <https://www.gob.mx/cms/uploads/attachment/file/412447/Indicadores_septiembre_2018_version_publica.pdf>.

7 Guerra Luz, Andres; DiSavino, Scott, “Rising U.S. NATURAL GAS EXPORTS TO Mexico capped by pipe delays” Thomson Reuters, 2018. Available at: <https://www.reuters.com/article/us-usa-mexico-natgas/rising-u-s-natural-gas-exports-to-mexico-capped-by-pipe-delays-idUSKBN1KV2B3>.

published into the Official Gazette of the Federation (OGF) in April 2014, which has as one of its main objectives "To optimize the coordination of efforts for the generation of energy infrastructure, thus ensuring its adequate development in order to have sufficient, quality energy at competitive prices.” By 2019, according to official data, the country will have more than 16,000 kilometers of gas pipelines and 24 points of entry. In terms of distribution, there are 2.6 million users, which means seven percent of the residential and commercial coverage[12]

However, the Mexican energy policy changed in 2018 when a new President of the Republic took office. Among his main campaign promises was to rescue the national energy sector by strengthening PEMEX and FCE. This rescue of the energy sector is clearly described by the National Development Plan 2019-2024 (NDP), in which various arguments are put forward to justify it: a) The energy reform imposed by the previous regime caused very serious damage to PEMEX and the Federal Commission of Electricity (FCE), that suffered the effects of the privatization plans; b) over the past six years, oil production has fallen so steadily that Mexico has gone from being an exporter to an importer of crude oil and refined fuels; c) however, the production of the private entities was insignificant, despite the very advantageous conditions under which it received the corresponding concessions. Due to these razons, without changing the constitutional rules, the new government started a process of neo nationalization of energy sector. In many aspects, such process confronts the Constitutional framework.

II. Gas Industry Structure

Natural gas is a hydrocarbon used as a fuel, in the industrial, commercial, and domestic sectors and some cases as an input in various sectors of economic activity in Mexico. Natural gas is mainly composed of methane gas, small proportions of ethane, propane, and other compounds. This varies according

8 Available at

https://www.elfinanciero.com.mx/economia/importaciones-de-gas-natural-tocan-nuevo-record-en-2019

9 This was stated by the engineer Saúl Cosme Pérez, general director of Graz & Grass, a 100% Mexican company, founded in 2001, specialized in the design, construction, and integral maintenance of natural gas networks

10 SeFCEtaría de Energía, “Política Pública para la implementación del mercado de gas natural”, 2016

11 This program, although announced by the President of the Republic, has not yet been issued.

12 Available at: https://petroquimex.com/gasoductos-infraestructura-clave-para-el-desarrollo-economico-y-social-de-mexico/



to the origin of the gas, which can be associated with oil fields, or it can be extracted independently.

The natural gas industry chain of value begins with the exploration and extraction of hydrocarbons. According to the Mexican constitutional and legal framework these activities are reserved to the Mexican State, but the government can carry them out either through allocations granted to the state's productive companies (currently only Petróleos Mexicanos, PEMEX) or through contracts signed with private, national, or foreign companies.

The second stage of the gas industry chain of vale is the processing of wet gas and condensates to obtain dry gas in the Gas Processing Centers. This activity is not reserved for the Mexican State and so it can be carried out by both state-owned productive companies and private, national, or foreign corporations by obtaining a permit from the Ministry of Energy. However, up to now the participation of private investment in this stage is practically non-existent, which would indicate that the constitutional reform of 2013 has not had the expected results, at least regarding the natural gas industry.

Gas processing is followed by the stages of transport, storage, and distribution, which can also be carried out by both state-owned and private production companies. As it will be explained later, these stages of the gas industry chain of value were the first to be opened up to private investment with the 1995 reform. To carry out these activities, the only requirement is to obtain a permit from the Energy Regulatory Commission (ERC). However, as will be explained later, the participation of private initiative in these activities is still not very representative. By 2019, according to official data, the ERC has granted 16 transportation permits and 19 distribution permits[13].

Finally, the natural gas industry chain of value includes marketing and retail stages. These activities are open to private investment through a permit issued by the FCE. According to official data, by 2019, the FCE has granted 58 commercialization permits and 20 retail permits[14].

13 https://datos.gob.mx/busca/dataset/permisos-otorgados-por-la-

comision 14 https://datos.gob.mx/busca/dataset/permisos-otorgados-por-la-

comision 15 Secretaría de Energía, “Prospectiva de Gas Natural 2018-2032”

México, 20187. Available at: https://base.energia.gob.mx/Prospectivas18-32/PGN_18_32_F.pdf

In addition to the above, it is necessary to comment that the new legal framework of this industry also allows the import of natural gas to be marketed in Mexico, by obtaining a permit issued by the Ministry of Energy. II.I. Exploration and Exploitation.

Until 2013, the public company PEMEX had a legal monopoly and was responsible for conducting natural gas exploration and extraction activities, but it faced serious technological and financial difficulties that prevented it from achieving an adequate level of efficiency. The Mexican Constitutional reform of 2013 substantially modified the structure of the natural gas industry.

According to the new constitutional framework and the Hydrocarbons Law (HL) only the Federal Executive, through the National Hydrocarbons Commission (NHC), may sign contracts with private parties for exploration and extraction of hydrocarbons. Selection of contractors will take place through bidding rounds in which both state-owned productive companies and private enterprises may participate under equal circumstances.

II.II. Gas Consumption

According to the Natural Gas Outlook 2018-2032, it is estimated that in 2032 the demand for natural gas will be 9,920.5 million cubic feet per day (mcfpd), 30.3% more than in 2017. Of the total demand, it is estimated that the electricity sector will consume 53.3%, the oil sector 24.3%, the residential and services sector 20.2%, and finally the auto-transportation sector 0.1%[15].

In contrast, according to the Prospective Gas L.P. 2018-2032[16], it is estimated that in 2032 the demand for Liquefied Petroleum Gas will be 316.2 million barrels per day (mbd), being the residential sector the biggest consumer of this fuel[17].

On the other hand, Natural Gas Vehicle (NGV) still has not a very significant demand. According to information from the International Association for Natural Gas Vehicles, it is

16 This gas is mainly used in the residential and service sectors. 17 Secretaría de Energía, “Prospectiva de Gas L.P. 2018-2032”, México

2017 Available at: <https://base.energia.gob.mx/Prospectivas18-32/PGLP_18_32_F.pdf>.



estimated that in Mexico there are 15,000 vehicles adapted to NGV[18]. II.III Participation of private investment in gas industry

Given that more than 90% of the natural gas consumed in the country is imported[19], despite the opening of the energy sector, the participation of private companies in this industry is not yet relevant.

Although the energy reform opened up exploration and extraction activities to private investment, through the signing of contracts with the Mexican government, PEMEX continues to be the main company in the sector, with 10 assignments concentrating 56% of the extraction[20].

III. Regulatory Framework.

In Mexico, there is no specific law on the natural gas industry. Its regulation is included within the legal framework of hydrocarbons[21]. In that sense, the constitutional basis of legislation on natural gas are found in articles 25, fourth paragraph; 27, seventh paragraph; and 28, fourth paragraph of the Political Constitution of the United Mexican States, as amended in 2013[22].

The above-mentioned constitutional provisions unbundled the activities that integrate the gas industry chain of value chain by dividing them into strategic and non-strategic activities. Under Article 27 of the Political Constitution of the United Mexican States, natural gas exploration and extraction activities are reserved to the nation, which may carry them out either through allocations granted to productive state companies or through contracts signed with private, national, or foreign companies. The execution of strategic activities is also subject to the authorization of the NHC.

Any other activities that integrate the natural gas industry chain of value are considered non-strategic activities, including processing, compression, liquefaction, decompression, regasification, transportation, storage, distribution, and sale of natural gas. Since these activities are

18 Available at https://energiahoy.com/2019/03/04/vehiculos-a-gas-

natural-desplazara-a-los-vehiculos-electricos-en-el-futuro-amgnv/ 19 Available athttps://www.elfinanciero.com.mx/economia/90-del-gas-

que-se-consume-en-mexico-ya-es-importado 20https://www.gob.mx/cms/uploads/attachment/file/403328/Indicadores_agosto_2018_versi_n_publica.pdf

not reserved for the nation by the Constitution, they can be developed by both state-owned productive enterprises, as well as by private companies through a permit granted by the Ministry of Energy or by FCE.

The Hydrocarbons Law (HL), approved by the Federal Congress in 2014, is a Regulatory Act of articles 25, fourth paragraph; 27, seventh paragraph; and 28, fourth paragraph of the Political Constitution of the United States of Mexico about hydrocarbons (article 1)[23] and its purpose is to regulate the hydrocarbons industry. According to article 1, the hydrocarbons industry comprises the following activities:

I. recognition and surface exploration, and the exploration and extraction of hydrocarbons

II. treatment, refining, disposal, marketing and transport and storage of oil,

III. processing, compression, liquefaction, decompression, regasification, as well as the transport, storage, distribution, and sale of natural gas,

IV. transportation, storage, distribution, and retailing of liquefied petroleum gas,

V. transportation, storage, distribution, and retailing of petroleum products, and

VI. pipeline transportation and storage that is linked to petrochemical pipelines.

Regarding how the nation carries out the exploration and exploitation of hydrocarbons, the new law provides that:

a) In accordance with provisions of articles 25, fourth paragraph, 27, seventh paragraph, and 28, fourth paragraph of the Political Constitution of the United Mexican States, the nation will carry out the exploration and extraction of hydrocarbons (article 3).

b) Hydrocarbon exploration and extraction activities referred to in section I of Article 2 of the HL are considered as strategic in the terms of the fourth paragraph of Article 28 of the Constitution.

21 Natural gas is a mixture of gases composed mainly of methane. It is a combustible gas that comes from geological formations, so it is a non-renewable energy source.

22 OGF December 20, 2013 23 OGF August 11, 2014.



c) Only the nation will carry out the activities indicated in the previous paragraph, through assignees and contractors.

However, the HL does not banned participation of private investment in these activities since Article 5 indicates that the State monopoly over them will be exercised through assignees (productive State companies) and contractors (private companies).

On the other hand, the rest of the activities that according to article 2 of the HL integrate the hydrocarbon industry, can be conducted both by PEMEX or by any other productive company of the State or parastatal entity, as well as by individuals who have previous authorization or permit. The following sections analyze these three aspects of the natural gas industry.

III.I. Allocations for natural gas exploration and extraction activities

Allocations to conduct exploration and extraction of natural gas activities through productive companies of the state are granted by the Ministry of Energy. Article 6 of the HL states that the Federal Executive, through the Ministry of Energy, grants and modifies the allocations for exploration and extraction of natural gas, subject to a favorable opinion of the NHC.

Although it corresponds to the Ministry of Energy granting allocations for exploration and exploitation of natural gas, the third paragraph of Article 6 of the HL states that it requieres a prior and favorable opinion of the NHC, which must be issued through a technical opinion. For such purposes, Article 10 of the Regulations provides that the Ministry of Energy must submit to the NHC the proposal for the Allocation Area so that the NHC has to issue its technical opinion within 20 business days from the request was received. In exercising this power to issue a technical opinion, the NHC may request from the State-owned production company the information it considers necessary to issue such opinion, which must be sent to the NHC within the following 15 working days.

According to Article 11 of the Regulations, the technical opinion of the NHC must contain, at least, the following:

a) The opinion of the NHC which shall include, at least, the analysis of compliance with requirements established by Article 6 of these Regulations, and

b) If applicable, its concordance with the proposed Allocation Area sent by the Ministry.

The HL does not deal with granting of allocations, but article 12 of the Regulations states that the Ministry shall decide on the granting of the allocation within 15 working days after receiving the technical opinion issued by the NHC.

However, it is relevant to note that under Article 6 of the HL, allocations are granted by exception and therefore, such granting must be duly motivated by the Ministry of Energy. The motivation referred to in Article 6 of the HL as a requirement for the granting of allowances must refer to two aspects:

a) Whether it is the most appropriate mechanism for the interest of the State in terms of production and guarantee of supply, and

b) Whether the assignee has the technical, financial, and implementing capacity to extract the hydrocarbons efficiently and competitively (Article 9 of the Regulation).

Article 9 of the Regulations under HL indicates the cases that will have the character of exceptions to the requirements of Article 6 of the Law. These exemptions are applicable when:

I. It is a geological structure that is estimated to contain Prospective Resources greater than 2 billion barrels of crude oil equivalent and that can be efficiently incorporated as a Reserve with the own resources of a productive company of the State;

II. It is a field in which the productive company of the State has superior technical, financial, and execution capacities to extract the Hydrocarbons efficiently and competitively to the market average;

III. There is a specific area that presents the ideal characteristics to promote the development of some technique or technology to increase the incorporation of reserves or the recovery factor;

IV. A Contract for Exploration and Extraction is administratively concluded and it is necessary to operate temporarily in the Contract Area, while a new Allocation is awarded or a new Contract for Exploration and Extraction is bid, or

V. The Ministry determines that the Allocation is the most adequate mechanism for the interest of the State in terms of production and guarantee of supply of Hydrocarbons and considering the economic and social return of the Allocation.



Article 8 of the Regulations vested the Ministry of Energy with the power of revoking and authorizing the assignment or waiver of such allocations. These allocations may be granted both to PEMEX and to any other productive company of the State.

Article 13 of the Regulations states that in the title of the allocation, the Ministry of Energy shall establish the following terms and conditions:

I. Description of the Exploration work and its periods, if applicable;

II. Description of the Extraction work and its periods, if applicable; and

III. Other issues established by the Ministry.

In addition to the above, the allocation title must include the minimum percentage of national content determined by the Ministry of Energy (Article 14 of the Regulations). Although the wording of Article 14 of the Regulations is not clear on this point, it is understood that the Ministry of Energy has the power to define the percentage of national content, but to do so it must consider the opinion of the Ministry of the Economy. The Ministry of the Economy has a term of 10 working days to issue its opinion. However, it does not say from what moment the deadline is counted. Article 14 of the Regulations indicates that the Ministry of Energy must consider that the percentage of national content does not generate undue advantages that could affect the competitive position of assignees or contractors.

III.II. Contracts for exploration and extraction of natural gas.

Signing of contracts for the execution of natural gas exploration and extraction activities is regulated in Articles 11 to 31 of the HL and 26 to 59 of its Regulations. Article 22 of the HL provides in this regard:

The Contracts for exploration and extraction shall be regulated by provisions of this Law and its Regulations. For

24 In the service contract, the contractor is paid for the service rendered,

without this payment being related to the production or the profit obtained. 25 In utility or production-sharing contracts, the contractor is entitled to a

payment in kind, agreed in the contract, i.e. a percentage of the production generated or the profit obtained.

their execution, commercial legislation and common law shall be supplementarily applicable, when it is not contrary to this Law and its Regulations.

Fundamental principles governing these contracts are set out in articles 11, 15, and 23 of the HL. According to these provisions:

a) Only the Federal Executive, on behalf of the Mexican State and through the NHC, may sign contracts for the exploration and extraction of natural gas.

b) The selection of the contractors will always be through a bidding process that will be carried out by the NHC.

c) Contracts for the exploration and extraction of natural gas may be signed with PEMEX, other productive companies of the State, and private legal entities, either individually, in a consortium, or a joint venture.

Moreover, according to the HL, contracts with private companies to carry out natural gas exploration and extraction activities must be awarded by open public bidding, with the only exception of natural gas associated to mining betas. These contracts, once awarded, will be executed with the Mexican government through the NHC.

The contracts signed for each exploration or extraction area may adopt one of the following modalities:

a) Contracts of services[24]

b) Contracts of profit or production sharing[25]

c) Contracts of license[26]

Contract bidding processes have been carried out through "bidding rounds" organized by the NHC with the intervention of both the Ministry of Energy and the Ministry of Finance under the terms of the applicable legislation. It should be noted that the constitutional reform of 2013 granted PEMEX the right to adjudicate areas in exploitation and fields in production that were in a capacity to operate through

26 In the license contract, the contractor has the right to have the State transfer to it the profit from the hydrocarbons extracted for a fee.



allocations. This was called "the round zero". The Ministry of Energy, with technical assistance from the NHC, granted PEMEX 489 allocation titles. Therefore, the first round of contract bidding was called "round 1" in which both private and state-owned productive companies could participate. In this first round, the bids were focused on exploration areas and shallow water extraction fields. To date, the NHC has awarded 107 exploration and extraction contracts in 3 rounds and it is estimated that the State's income accumulated until July 2020 is 2,361 million dollars[27].

III.III. Non-Strategic Activities.

The conduction of the activities of the natural gas industry is considered as non-strategic only require to obtain a permit for their execution. Under Article 48 of the HL, the Ministry of Energy is responsible for granting permits to carry out the following activities: the processing of natural gas, and the export and import of natural gas. According to the same provision, the FCE will grant permits for the following activities: transportation, storage, distribution, compression, liquefaction, decompression, regasification, marketing, and retailing of natural gas.

IV. Government and Regulatory Roles in the Industry

The natural gas market is regulated through the Ministry of Energy, the NHC, and the FCE. According to the Organic Law of the Federal Public Administration, the Ministry of Energy is responsible for implementing national energy policy. The Ministry of Energy is responsible for granting and revoking allocations, as well as establishing the guidelines that govern the bidding processes for the placement of contracts or plans in which the private sector may carry out activities in strategic areas. Likewise, it is up to the Ministry to design those contracts, define which areas will be tendered, and which areas will be contracted, as well as to grant the permits for processing, import, and export of natural gas.

The constitutionally created regulatory entities, FCE and NHC, are independent from the Executive. These entities already existed before 2013, but the constitutional reform of that year modified their legal nature and strengthened their powers. The constitutional reform provided the basis for the Law of the Coordinated Energy Regulatory Entities[28]. According to this law, the FCE is the regulatory entity

27 Available at: https://rondasmexico.gob.mx/esp/cifras-

relevantes/?tab=00

concerning all activities in the liberalized hydrocarbons electricity sector, i.e., those that were not reserved by the Constitution to the nation; while the NHC has a more limited scope of application, only to the area of activities related to the hydrocarbons subsector. The NHC is the regulatory entity for the strategic areas that were reserved by the energy reform for the nation but that can be developed through allocations to productive companies or contracts with private companies.

V. Regulation of gas networks and infrastructures

The HL dedicates Chapter II of Title III to regulate integrated natural gas transportation systems. Article 60 of this law allows the natural gas pipeline transportation and storage systems that are interconnected to form integrated systems to expand coverage or provide systemic benefits in terms of improvements in the conditions of safety, continuity, quality, and efficiency in the provision of services.

An authorization granted by the FCE is required for construction of integrated systems, but the Ministry of Energy may subject it to certain requirements through the issuance of a public energy policy. Integrated systems are operated by a manager, which may be a public, private, or public-private entity, and will require a specific permit issued by the FCE.

According to article 62 of the HL, the managers oversee the following activities:

I. To coordinate the different Pipeline Transport and Storage Permit holders to achieve continuity, quality, safety, and efficiency in services provisioning, to guarantee the effective open access and not unduly discriminatory.

II. To be responsible for payment of tariffs of Transport or Storage systems that integrate the Integrated System, in the terms determined by the Energy Regulatory Commission.

III. To promote the development of market centers and wholesale markets.

IV. To promote the liquidity of the markets in which it participates and ensure the balance and operation of the corresponding Integrated System, following the applicable provisions.

28 OGF August 11, 2014.



V. To manage the capacity secondary market of the corresponding Integrated System.

In the same avenue, according to article 65 of the HL, the Integrated National Natural Gas Transportation and Storage System may be composed of the following infrastructure:

I. Transportation Pipelines and Natural Gas Storage Facilities, and

II. Compression, liquefaction, decompression, regasification, and other facilities related to the infrastructure of Natural Gas Transportation and Storage.

Currently, the only manager is CENAGAS[29], a decentralized public entity in the energy sector that aims to ensure energy security, i.e. the supply and provision of this fuel. It is fully operational, manager, and administrator, but it is not an authority.

V.I. Storage and transportation

The classic system for transporting gas between two given points is the gas pipeline (highly elastic carbon steel pipes), either buried on the surface of the earth or at the bottom of the oceans. The transport capacity of gas pipelines depends on the pressure difference between their ends and on their diameter (as this increases, so does the transport capacity).

The dry natural gas obtained from the processing complexes, the one extracted directly from fields, or the one that has been imported, can be stored, transported, and distributed to the final users through pipelines[30].

As mentioned above, since 1995, individuals may provide natural gas storage, transportation, or distribution services through pipelines, for which they require a permit granted by the FCE.

29 Decreto por el que se crea el Centro Nacional de Control de Gas

Natural, published in the OGF on August 28, 2014. Available at: <https://www.gob.mx/cms/uploads/attachment/file/191598/DeFCEto_por_el_que_se_FCEa_el_CENAGAS.pdf>.

30 Pipeline transport is the most efficient way to transport natural gas, especially on a large scale. Due to its cost structure and the high initial investment required in fixed capital, which makes the cost of providing the service lower when there is only one carrier, this activity constitutes a natural monopoly. Given this condition, transportation permits involve the need for economic regulation, as well as the issuance of general terms and

Under the provisions of the Energy Reform of 2013, processing, transportation, storage, distribution, and marketing activities are unbundled. So, PEMEX transferred the ownership of its infrastructure for natural gas pipeline transportation, corresponding to the National Gas Pipeline System and the Naco Hermosillo System, to CENAGAS, as well as the associated permits to perform such activity.

Therefore, CENAGAS is the transportation licensee and, also, the independent manager and administrator of Sistrangas, which is comprised of the National Gas Pipeline System and those private pipeline systems authorized by the FCE for tariff purposes.

Currently, these ducts are as follows: Tamaulipas Gas Pipeline, Gas Pipeline del Bajío, Gas Natural del Noroeste (formerly Transportadora de Gas Natural de Zacatecas), Gas Pipeline del Noreste (Los Ramones, Phase I), TAG Pipelines Norte (Los Ramones Phase II Norte) and TAG Pipelines Sur (Los Ramones Phase II Sur)[31].

Article 69 of the HL establishes that CENAGAS must propose a Five-Year Plan for the Expansion of the Sistrangas to the Ministry of Energy for its approval, after receiving the FCE's technical opinion. This document contains the indicative planning proposed by CENAGAS, in addition to the projects of social coverage and those that the Ministry of Energy considers strategic to guarantee the efficient development of the System.

One of the key measures to achieve the development of a competitive natural gas market is the implementation of the capacity reserve for Sistrangas users to ensure open access on non-discriminatory terms, as well as to identify infrastructure needs to meet the demand.

V.II. Transport

The way to circulate the gas through the pipelines is to increase the gas pressure at certain points of the pipeline. This action is

conditions, open access that is not unduly discriminatory, and the approval of rates by the FCE. Such rates emulate those that carriers would charge in a competitive environment.

31 Secretaría de Energía, “Plan Quinquenal de Expansión del Sistema de Transporte y Almacenamiento Nacional Integrado de Gas Natural 2015-2019” Available at: <https://www.gob.mx/cms/uploads/attachment/file/43397/Plan_Quinquenal_del_Sistema_de_Transporte_y_Almacenamiento_Nacional_Integrado_de_Gas_Natural_2015-2019.pdf>.



carried out in the compression stations, which ensure the correct circulation of gas flows, compensating for the pressure losses that occur during transport. The control of the gas flows is carried out from facilities where the measurements of pressures, temperatures, flows, and calorific powers are received (control centers). Regulation on this specific aspect in Mexico is precarious and can only be referred to as the Official Mexican Standard NOM-007-SEFCE-2010, Natural Gas Transportation issued by the FCE in 2010. The purpose of this standard is to establish the technical specifications and minimum safety requirements to be met by natural gas transportation systems through pipelines, as well as by compression stations.

V.III. Open access to the network principle

The HL establishes the principle of open and non-discriminatory access to the gas pipeline network. In this regard, Article 70 of this law provides in its first paragraph:

Permit holders that provide transportation and distribution services to third parties using pipelines, as well as hydrocarbon, oil, and petrochemical storage services, shall have the obligation to provide open and non-discriminatory access to their facilities and services.

The same mentioned provision points out the rules that govern this access, which are as follows:

a) Open access depends on the capacity in the systems, in terms of the regulation issued by the Energy Regulatory Commission.

b) The Permit holders that have the capacity that is not contracted or that, being contracted, is not used, shall make it public through electronic bulletins allowing third parties to take advantage of such available capacity.

c) The use of this capacity requires prior payment of the authorized tariff and following the conditions for the provision of the service established by the FCE.

In addition to the above, the HL provides that the provision of services under the open access principle shall be subject to

32 OGF January 12, 2016. 33 OGF August 27, 2018. 34 The Contract Assignment Program (CAP) is an instrument that

promotes the entry of new participants in the natural gas industry for the

the general provisions issued by the FCE. The FCE will issue the regulations to which transportation and storage facilities will be subject to be considered of own use, while the Ministry of Energy will issue the public energy policy required to guarantee a reliable supply and open access to the Natural Gas Internment Pipelines.

The FCE issued general administrative provisions regarding open access and the provision of transportation services by pipeline and storage of oil and petrochemical products in 2016[32], which were amended in 2018[33].

The 2018 reforms were intended to simplify and streamline procedures, requirements, and deadlines for permit holders seeking to provide the service. At the same time, the updating of the provisions contemplates agile and low-cost processes for capacity cessions, while users will be able to agree bilaterally and freely on the conditions applicable to the cession of capacity they make.

VI. Natural gas trading

Natural gas obtained from the gas processing complexes, as well as the imported gas, which is subsequently transported by pipeline, is delivered to the end-users employing a supply contract signed with the supplier, which integrates both the molecule and the transport. Currently, most of the supply contracts are signed between the final users and PEMEX, but there are also private companies in charge of the final supply of this hydrocarbon, especially for domestic purposes.

As part of the economic regulation to which PEMEX is subject, due to its market position, FCE issued a resolution requiring the state-owned production company to implement a Gradual Contract Assignment Program[34].

This Program establishes that, within a maximum period of 4 years from the date of authorization by FCE, the state-owned production company must transfer the equivalent of 70% of the volume associated with its natural gas commercialization contract portfolio, not including the volumes associated with the self-consumption of the state-owned production company and its subsidiaries.

benefit of the electrical, industrial, service, and residential user sectors. It is an asymmetric regulation instrument for Pemex to assign 70 percent of its natural gas contract portfolio to third party marketers



In addition to the unbundling of transmission and marketing activities, the new regulatory framework establishes that natural gas marketing requires a permit issued by the FCE. VII. Supply to the Final Customers:

The supply of natural gas to the final customer is poorly regulated in Mexico. The HL only mentions it in 3 precepts Article 77 states that natural gas must be supplied without alterations, while Articles 78 and 79 only refer to the FCE's power to issue Official Mexican Standards regarding natural gas quality specifications and test, sampling, and verification methods applicable to qualitative characteristics, as well as volume in natural gas transportation, storage, distribution and, if applicable, retailing.

VII.I. Tax regime

In Mexico, the consumption of fossil fuels is subject to the payment of two federal taxes, the Value Added Tax (VAT) and the Special Tax on Production and Services (STPS). The VAT is caused at a rate of 16% on the value of the fuel.

As for the STPS, it should be noted that in 2013 an amendment was proposed to the law of this tax[35] according to which the sale of natural gas would have a specific treatment, being taxed with a tax equivalent to 11.94 cents per thousand cubic meters of that hydrocarbon, however, this proposal was not approved by the Congress of the Union. However, the disposal of natural gas is taxed by the STPS on a generic basis. The law states that the disposal of any other fossil fuel not included in the list of fossil fuels found in Article 2, Section I, paragraph H, would be taxed with 48.87 pesos per ton of carbon contained in the fuel[36].

VII.II. Security of supply and other public service obligations

Under Article 122 of the HL, the Federal Executive, through the Ministry of Energy, is responsible for promoting and overseeing an adequate supply of energy in the national territory, for which it may instruct, subject to a favorable opinion from the Ministry of Finance and Public Credit, PEMEX, the other productive enterprises of the State and CENEGAS to carry out those projects that they consider necessary for the generation of social benefits and as

35 Law on the Special Tax on Production and Services, published in the

OGF on December 30, 1980.

mechanisms to promote economic development, in terms of this Law and the public policy on energy in the country.

On the other hand, Article 58 of the same law states that marketing and supply activities covered by a permit have the character of public utility. Therefore, according to the same precept, the temporary taking of the goods, rights, and facilities necessary for the provision of the service or its adequate operation will proceed in the cases foreseen in the Expropriation Law or when the Permit Holder fails to comply with his obligations due to causes not attributable to him, such as war, natural disaster, serious disturbance of the public order or when an imminent danger for the national security, the energy security or for the national economy is foreseen.

Taking lasting is defining by the authority. However, in any case, the original term or in its case the extensions, as a whole, may not exceed 36 months. The permit holder may request the authority that issued the permit to terminate the taking when it is demonstrated that the causes that caused it have been corrected or eradicated, or have disappeared.

VII.III. Consumer Protection

The HL does not deal with the protection of consumers and only states in article 58 that the temporary taking referred to in the previous section, may have the purpose of guaranteeing the interests of final users and consumers. Meanwhile, the Federal Consumer Protection Law only refers to the protection of natural gas consumers in its Article 128ter to indicate that, a violation of that law will be considered serious when it involves the consumption of natural gas.

VII.IV. Public price intervention

The price of natural gas in Mexico is not directly determined by any authority but is fixed by the market. However, the authority does influence the determination of a maximum price for this hydrocarbon. The price is defined taking into consideration the reference price of the molecule in the United States and adding the transportation tariff, the cost of fuel gas, import expenses and service cost, as well as applicable taxes.

In 2016, the FCE issued the methodology aimed at determining the maximum price of natural gas for first-hand

36 México, Plataforma Mexicana de Carbono, “Nota Técnica, Impuesto al Carbono en México” Available at: <http://www.mexico2.com.mx/uploadsmexico/file/artimpuestofinal.pdf>.



sales. According to this methodology, the maximum price of natural gas for first-hand sales incorporates gas prices in the relevant market in the United States of America, transportation costs between the border area in Reynosa and pipelines in South Texas, and transportation costs in Mexico. The maximum price of natural gas for the first-hand sale will be defined in daily or monthly terms, depending on the buyer's preference. PEMEX, its subsidiaries, affiliates, or divisions shall make available to the public the maximum daily and monthly prices of natural gas for the first-hand sale. For such purpose, it must operate and maintain a permanently updated information system accessible via remote, which allows purchasers to know the prices in force at each point of sale.

VII.V. The virtual distributor-supplier

The virtual natural gas distributor is a pipe that transports the compressed gas from the endpoint of a pipeline to the starting point of another where it is decompressed, to take the hydrocarbon to places that otherwise would not be connected by the network.

In Mexico, the development of these systems is still precarious and we can only mention the example of the virtual gas transport between Ciudad Juarez and Nuevo Casas Grande, Chihuahua, in the north of the country. In this case, natural gas is compressed in the first entity, transported in vehicles, and then decompressed in the second city, and from there it travels again through pipelines.

Due to this scarce development, the legislation does not yet regulate the virtual natural gas transportation system.

VII.VI. The supply of Liquefied Petroleum Gas (L.P. Gas)

In 2015 the supply of L.P. gas was generated by two large segments: PEMEX (62.6%) and imports (37.4%). Demand is made up of more than 1,000 distribution companies, including Grupo Tomza, Gas Uribe, Vela Gas, Gas Nieto, and Gas Zaragoza. This activity is contracting, mainly due to the increase in natural gas consumption.

On January 1, 2016, the strategy of liberalization of the L.P. gas market began, whose import permits can be granted to any

37 https://www.gob.mx/sener/es/articulos/permisos-otorgados-por-sener-

para-la-importacion-y-exportacion-de-petroliferos-e-hidrocarburos?idiom=es

interested party who complies with the applicable legal provisions. In this case, it is the responsibility of the Ministry of Energy to regulate, supervise, grant, modify and revoke the permits for the export and import of hydrocarbons and oil products under the terms of the Foreign Trade Law and with the support of the Ministry of Economy.

As of April 2, 2020, 24 L.P. gas import permits are in force[37]. The regulatory objectives of L.P. gas wholesale are to ensure market sustainability and promote competitive prices. In this regard, the FCE has published agreements, resolutions, and decrees that serve as regulatory instruments, among which the following stand out:

a) Decree that extends the validity of the diverse, which subjects the liquefied petroleum gas to maximum prices of firsthand sales and sales to end-users, published on December 31, 2015. (30/09/16)

b) Resolution of the Energy Regulatory Commission extending the deadlines for updating the contracts for the commercialization of oil and petrochemicals other than gasoline and diesel, as well as for the implementation of the methodologies for determining the first-hand sales prices of these products. (03/08/16)

c) Resolution by which the Energy Regulatory Commission extends the validity of contracts for oil products other than gasoline and diesel, as well as the period for the conclusion of the transitional regime referred to in resolutions six and eight of Resolution RES/071/2016. (16/06/16)

d) Agreement by which the Energy Regulatory Commission extends the term for the permit holders of transport and distribution activities by means other than pipelines, sale, and retailing of liquefied petroleum gas to submit the reports corresponding to the first and second quarter of 2016, provided for in the corresponding permit titles. (14/06/16)

e) Resolution by which the Energy Regulatory Commission issues the administrative provisions of a general nature that establish the formats for the presentation of information by the permit holders for the commercialization of hydrocarbons, petroleum products, and petrochemicals. (06/01/16)



f) Resolution by which the Energy Regulatory Commission issues the general administrative provisions that establish the requirements for the submission of applications for provisional permits for the transportation, storage, distribution, retailing, and management of integrated oil, petroleum, petrochemical, and bioenergy systems. (27/01/15)

g) Resolution by which the Energy Regulatory Commission issues the general administrative provisions that establish the specifications of the requirements referred to in Articles 50 and 51 of the Hydrocarbons Law, the permit application forms and the models of the permit titles to carry out the activities of storage, transportation, distribution and retailing of liquefied petroleum gas. (15/12/15) VIII. Cooperation with neighboring countries and international organizations to which it is a party, and which affect the sector.

In Mexico, according to Article 4 fraction XXXVI of the HL, the Integrated Gas Pipeline System is composed of the interconnected systems of gas pipelines and storage facilities. The network has a length of 17,000 km: 48 oil pipelines, 78 gas pipelines, 11 gas pipelines, and 4 oil/gas pipelines.

At the beginning of 2012, Mexico and the United States had 16 interconnections to import gas with a capacity of 2,758 MMPCD. These are: Tijuana/Otay Mesa, Mexicali/Calexico, Los Algodones/Ogilby, Nogales, Naco/Douglas, dos Agua Prieta/Douglas, San Jeronimo, El Hueco/El Paso Clin, Acuña/Del Rio, Piedras Negras/Eagle Pass, Ciudad Mier/Roma-Salineño, Argüelles/Peñitas, Reynosa/Hidalgo, Reynosa/Alamo, Rio Bravo. By 2017, 6 more interconnections will be in operation: San Isidro, Sásabe, Camarfo, Argüelles, Waha/San Elisario and Waha/Presidio. Thus increasing the import capacity, which is over 11,000 million cubic feet per day.

In 2017 the U.S. government approved a new project consisting of a 74 km pipeline called the Nuevo Oleoducto de Burgos, which will be operated by the U.S. company NuStar, connecting the PEMEX Burgos Gas Plant near Reynosa, Tamaulipas, Mexico, and NuStar's terminal near Edinburgh, Texas, with the capacity to deliver up to 108,000 barrels per day of certain refined petroleum products.

38 National Development Plan 2019-2024. Available at:< https://lopezobrador.org.mx/wp-content/uploads/2019/05/PLAN-NACIONAL-DE-DESARROLLO-2019-2024.pdf>.

IX. The role of natural gas in the energy transition.

As a result of the 2013 constitutional and 2014 legal reforms, Mexico has a new regulatory framework for the natural gas industry. The new legal and institutional arrangements could mean important challenges for the fulfillment of the goals established by Mexico in its National Contribution to climate change.

The incorporation of new natural gas infrastructure in Mexico seeks to promote the substitution of traditional fuels, such as diesel, liquid petroleum gas, and fuel oil, mainly in the industrial sector and in the generation of electrical energy. This will give a guideline to other sectors such as the service and residential sectors to start consuming natural gas to a greater extent in the medium term; and thus, change the structure of the energy demand in the country.

One of the main motivations for this structural change in the energy industry is that natural gas is cheaper than traditional fuels because it generates monetary savings for economic agents who decide to use it in their activities. Also, it significantly reduces emissions of pollutants mainly from the industrial sector, vehicles, and electric power generation

Both the National Development Plan 2013-2016 and the National Energy Strategy 2013-2027 considered the need to implement the natural gas alternative to make a transition to cleaner and more sustainable energy generation sources.

However, the proposed National Development Plan[38] recently presented by the new head of the executive branch to the Congress of the Union seems to suggest a return to energy policy based on fossil fuels without considering natural gas as an alternative that could contribute to Mexico's commitments under the Paris Agreement on climate change.

X. The new energy nationalism impact on gas industry

In accordance with the new NDP, although formally the reform of 2013 and its secondary laws of 2014 have not been reversed, in practice the energy reform was halted and began to be reversed almost immediately after the beginning of the new presidential term.



Among the measures adopted by the new government against energy reform are the following:

a) The National Hydrocarbons Commission announced the suspension of the bids for the oil rounds under the argument that the progress of the current contracts for the exploration and extraction of hydrocarbons would be reviewed.

b) The CENACE cancelled the long term auction 2018 SLP-1/2018 announced on 30 January 2019, which would allow the purchase of energy from clean and renewable sources. This auction had already been suspended in December 2018 to review its objectives and scope[39].

c) The FCE proposed renegotiation of contracts for the transport of gas by pipeline between the government and the private initiative during 2019[40].

On that basis, the government was advancing in the terms set out by the NDP in a twofold sense. On the one hand, it was reversing the energy transition and on the other it was trying to take PEMEX and CFE's competitors out of the market.

CONCLUSIONS

While the demand for natural gas is increasing in Mexico, domestic production has not grown due to costs and lack of infrastructure, so Mexico remains a country dependent on imports, mainly from the United States.

Although the constitutional reform of 2013 practically opened to private investment all the activities that integrate the value chain of the natural gas industry, the participation of individuals in them is far from being considered.

In recent years, Mexico had considered natural gas as an alternative to contribute to the reduction of greenhouse gases, so it was considered both in legislation and in planning instruments, but the new government seeks energy self-sufficiency based on the most polluting hydrocarbons, so it is not expected that in the coming years there will be a further development of natural gas markets.

39 Office No.SENER.100/2019/075 e by which the Secretariat of Energy requests the Director General of CENACE to cancel the 2018 Long Term Auction SLP-1/2018. The auctions are one of the three mechanisms for acquiring clean energy certificates.

However, the new energy policy of Mexico is affecting modernization of gas industry and cooperation with its North American and European partners.

REFERENCES [1]. Availabe at

https://www.gob.mx/cms/uploads/attachment/file/528054/Balance_Nacional_de_Energ_a_2018.pdf

[2]. SeFCEtaría de Energía, “Balance Nacional de Energía 2017” México, 2018. Available at: <https://www.gob.mx/cms/uploads/attachment/file/414843/Balance_Nacional_de_Energ_a_2017.pdf>.

[3]. Available at https://hidrocarburos.gob.mx/media/3652/reporte_reservas_recursos2020.pdf

[4]. Available at http://sie.energia.gob.mx/movil.do?action=cuadro&cvecua=DIIE_C35_ESP

[5]. Available at https://www.eleconomista.com.mx/empresas/Mexico-duplico-sus-compras-de-gas-natural-a-Estados-Unidos-en-un-lustro-20200226-0018.html

[6]. SubseFCEtaría de Hidrocarburos Dirección General de Exploración y Extracción de Hidrocarburos, “Indicadores de Exploración y Extracción de Hidrocarburos septiembre 2018”. Available at: <https://www.gob.mx/cms/uploads/attachment/file/412447/Indicadores_septiembre_2018_version_publica.pdf>.

[7]. Guerra Luz, Andres; DiSavino, Scott, “Rising U.S. NATURAL GAS EXPORTS TO Mexico capped by pipe delays” Thomson Reuters, 2018. Available at: <https://www.reuters.com/article/us-usa-mexico-natgas/rising-u-s-natural-gas-exports-to-mexico-capped-by-pipe-delays-idUSKBN1KV2B3>.

[8]. Available at https://www.elfinanciero.com.mx/economia/importaciones-de-gas-natural-tocan-nuevo-record-en-2019

[9]. This was stated by the engineer Saúl Cosme Pérez, general director of Graz & Grass, a 100% Mexican company, founded in 2001, specialized in the design, construction, and integral maintenance of natural gas networks

[10]. SeFCEtaría de Energía, “Política Pública para la implementación del mercado de gas natural”, 2016

[11]. This program, although announced by the President of the Republic, has not yet been issued.

[12]. Available at: https://petroquimex.com/gasoductos-infraestructura-clave-para-el-desarrollo-economico-y-social-de-mexico/

[13]. https://datos.gob.mx/busca/dataset/permisos-otorgados-por-la-comision

[14]. https://datos.gob.mx/busca/dataset/permisos-otorgados-por-la-comision

[15]. Secretaría de Energía, “Prospectiva de Gas Natural 2018-2032” México, 20187. Available at: https://base.energia.gob.mx/Prospectivas18-32/PGN_18_32_F.pdf

[16]. This gas is mainly used in the residential and service sectors. [17]. Secretaría de Energía, “Prospectiva de Gas L.P. 2018-2032”,

México 2017 Available at:

40 On 24 June 2020, the Federal Electricity Commission (CFE) file request to initiate arbitration in which it seeks the annulment of certain clauses of the transport services contract for the Texas- Tuxpan marine gas pipeline, the construction of which had already been completed.



<https://base.energia.gob.mx/Prospectivas18-32/PGLP_18_32_F.pdf>.

[18]. Available at https://energiahoy.com/2019/03/04/vehiculos-a-gas-natural-desplazara-a-los-vehiculos-electricos-en-el-futuro-amgnv/

[19]. Available athttps://www.elfinanciero.com.mx/economia/90-del-gas-que-se-consume-en-mexico-ya-es-importado

[20]. https://www.gob.mx/cms/uploads/attachment/file/403328/Indicadores_agosto_2018_versi_n_publica.pdf

[21]. Natural gas is a mixture of gases composed mainly of methane. It is a combustible gas that comes from geological formations, so it is a non-renewable energy source.

[22]. OGF December 20, 2013. [23]. OGF August 11, 2014. [24]. In the service contract, the contractor is paid for the service

rendered, without this payment being related to the production or the profit obtained.

[25]. In utility or production-sharing contracts, the contractor is entitled to a payment in kind, agreed in the contract, i.e. a percentage of the production generated or the profit obtained.

[26]. In the license contract, the contractor has the right to have the State transfer to it the profit from the hydrocarbons extracted for a fee.

[27]. Available at: https://rondasmexico.gob.mx/esp/cifras-relevantes/?tab=00

[28]. OGF August 11, 2014. [29]. Decreto por el que se crea el Centro Nacional de Control de Gas

Natural, published in the OGF on August 28, 2014. Available at: <https://www.gob.mx/cms/uploads/attachment/file/191598/DeFCEto_por_el_que_se_FCEa_el_CENAGAS.pdf>.

[30]. Pipeline transport is the most efficient way to transport natural gas, especially on a large scale. Due to its cost structure and the high initial investment required in fixed capital, which makes the cost of providing the service lower when there is only one carrier, this activity constitutes a natural monopoly. Given this condition, transportation permits involve the need for economic regulation, as well as the issuance of general terms and conditions, open access that is not unduly discriminatory, and the approval of rates by the FCE. Such rates emulate those that carriers would charge in a competitive environment.

[31]. Secretaría de Energía, “Plan Quinquenal de Expansión del Sistema de Transporte y Almacenamiento Nacional Integrado de Gas Natural 2015-2019” Available at: <https://www.gob.mx/cms/uploads/attachment/file/43397/Plan_Quinquenal_del_Sistema_de_Transporte_y_Almacenamiento_Nacional_Integrado_de_Gas_Natural_2015-2019.pdf>.

[32]. OGF January 12, 2016. [33]. OGF August 27, 2018. [34]. The Contract Assignment Program (CAP) is an instrument that

promotes the entry of new participants in the natural gas industry for the benefit of the electrical, industrial, service, and residential user sectors. It is an asymmetric regulation instrument for Pemex to assign 70 percent of its natural gas contract portfolio to third party marketers

[35]. Law on the Special Tax on Production and Services, published in the OGF on December 30, 1980.

[36]. México, Plataforma Mexicana de Carbono, “Nota Técnica, Impuesto al Carbono en México” Available at: <http://www.mexico2.com.mx/uploadsmexico/file/artimpuestofinal.pdf>.

[37]. https://www.gob.mx/sener/es/articulos/permisos-otorgados-por-sener-para-la-importacion-y-exportacion-de-petroliferos-e-hidrocarburos?idiom=es

[38]. National Development Plan 2019-2024. Available at:<https://lopezobrador.org.mx/wp-content/uploads/2019/05/PLAN-NACIONAL-DE-DESARROLLO-2019-2024.pdf>.

[39]. Office No.SENER.100/2019/075 e by which the Secretariat of Energy requests the Director General of CENACE to cancel the 2018 Long Term Auction SLP-1/2018. The auctions are one of the three mechanisms for acquiring clean energy certificates.

[40]. On 24 June 2020, the Federal Electricity Commission (CFE) file request to initiate arbitration in which it seeks the annulment of certain clauses of the transport services contract for the Texas- Tuxpan marine gas pipeline, the construction of which had already been completed.

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