Coal-filled stockings this Christmas for Pemex and CFE
The Mexican government had planned to announce the first contracts under the new energy framework by now, thus showing that the private sector was willing to partner with state-owned companies. Alas, as we reach the final days of 2025, as far as we know neither Pemex nor CFE has unveiled any partnerships, despite months of meetings with potential participants and work on drafting the new mixed contracts. While the private sector has a decidedly more positive view of Sheinbaum’s stance than the previous administration’s, agreements seem not yet to have materialized, or at least not made public. Yes, the administration is seen as less dogmatic, but as noted in earlier editions of this newsletter, the offered terms just haven’t been attractive enough to potential suitors.
Pemex seems not to have yet found a structure that companies find sufficiently attractive. Prospective partners have asked for clearer terms on cost recovery, better access to geological data, and more certainty around payment flows. International oil companies were never realistically interested in Mexico’s new model at this stage, and now even smaller players are stepping back. Reuters reported last week that more than a month has passed since Pemex’s CEO issued an urgent appeal to oil and gas companies for help stabilizing declining production; his pleas have gone unanswered.
Skepticism remains high given Pemex’s long-standing payment delays; its reported debt to suppliers reached a record US$28 bn by September. Although payment flows have improved since mid-October through the use of a US$13 bn fund, significant 2024 liabilities remain unresolved. These arrears remain a major barrier as Pemex seeks partners for 21 mixed contracts across shallow water, onshore and deep-water fields that could eventually add up to 450 kbpd, or about a quarter of Pemex’s projected 2033 output. Investors appear to doubt Pemex’s ability to meet future obligations given fiscal pressure, budget cuts and operational strain, and several major creditors have disclosed unpaid balances or pursued arbitration.
On the electricity side, the government announced a fast-track mechanism allowing private developers to build power plants. While initially welcomed, the process has since discouraged some participants, as the short timelines require developers to demonstrate financing and construction plans almost immediately. The Energy Ministry will disclose on December 17 which companies have been approved across 34 priority power plants totaling 5,970 MW (more than 2,000 MW of wind and the rest solar). It remains to be seen whether the response meets expectations. CFE hasn’t announced progress on its side to sign partnership under the new mixed contracts, and it is now focused on finishing the power plants started under the prior administration.
It is too early to call either process a failure; after all, it took more than a year before the first oil bids and renewable auctions under the 2013-14 energy reform gained traction. What matters now is seeing the initial wave of mixed contracts in the upstream and power sectors and understanding what needs improvement. Nobody expects a return to a free-market model, but it is clear that terms need to be refined to attract a broader range of players.
The one that got away: hopes for LNG mega-project fade out
Mexico’s largest proposed LNG export complex, Saguaro Energía, is now close to collapse after more than five years without securing the US$15bn needed for construction. Developed by Mexico Pacific Limited (MPL), the project was intended as a key outlet for CFE to offload excess contracted gas from the U.S. Praised at first, even by the López Obrador administration, the project floundered as global LNG prices normalized and financing dried up. President Sheinbaum said last week that the slowdown reflects technical reviews of gas availability from Texas and environmental assessments related to increased maritime traffic in the Gulf of California, emphasizing that no legal or administrative irregularities exist. Authorities are reviewing whether the current gas pipeline system can meet demand or whether a new pipeline would be required, while environmental regulators assess potential impacts on sensitive ecosystems such as the vaquita marina habitat. But the project faces a more straight-forward, deeper problem: it is running out of money.
In 2024, MPL underwent an ownership change when Quantum Capital sold its majority stake to Windsor Cliff Sponsor and three minority investors reportedly linked to members of Grupo Alfa’s founding family. Although the new owners initially sought to scale down the project to keep it alive, recent layoffs and internal discussions suggest that construction may never move forward. A collapse would undermine CFE’s plans to sell roughly 40% of its U.S.-sourced gas to the terminal through its trading arms, a strategy advanced under former CEO Manuel Bartlett to redirect oversupply. The project once held significant promise, with strong early investor interest and preliminary supply agreements, and its location on the Pacific coast offered a competitive route to Asian markets. However, the 2022 rejection of a US$400 mn equity injection prevented MPL from reaching a final investment decision, and legal challenges, community injunctions, and the need for new pipeline infrastructure contributed to its woes.
In other energy news…
- A federal jury in Houston found Mexican energy executive Ramón Alexandro Rovirosa Martínez, head of oil firm Roma Energy Holdings, guilty of conspiracy and two counts under the Foreign Corrupt Practices Act for bribing Pemex officials to secure contracts. Prosecutors said Rovirosa and former political candidate Mario Alberto Ávila Lizárraga (who remains at large), used cash, luxury handbags and high-end watches to pay about US$150,000 in bribes between 2019 and 2021, helping Roma Energy obtain US$2.5 mn in contracts. Rovirosa, a Mexican citizen with U.S. permanent residency, will be sentenced on 23 March.
- As to be expected, various (self-interested) U.S. business groups told the U.S. Congress in a public hearing that Mexico’s recent constitutional reforms, particularly those affecting the judiciary and the elimination of autonomous regulators, undermine commitments under the USMCA and heighten uncertainty for American investors. Speaking during the USTR-hosted Congressional sessions leading up to the 2026 review, organizations such as the U.S. Chamber of Commerce, USCIB, the National Foreign Trade Council, and the National Association of Manufacturers, warned that weakened judicial independence, preferential treatment for Pemex and CFE under the 2024 energy reform, and broader regulatory changes erode transparency and fair competition. While reaffirming strong support for extending the USMCA to 2042, they urged the U.S. government to address Mexico’s unfair treatment of private energy firms and to reinforce protections for long-standing U.S. investments. It remains to be seen whether the America First Trump administration cares about Mexico’s domestic and democratically supported judicial reform and energy policies, or is more focused on the politically sensitive car sector, and overall U.S. trade deficit with Mexico.
- Mexico’s Geological Service (SGM) lacks the capacity to take on new mining exploration projects in 2026 because it is already focused on three large exploration orders issued this year, said director Flor María Harp. She explained that these extensive areas in Sonora, Sinaloa, the State of Mexico and Durango will require years of drilling and analysis to determine whether deposits of gold, silver, copper, lead and other minerals are viable, and only then could the projects be prepared for bidding. While the regulatory framework is being updated to allow public-private collaboration, with companies potentially gaining an advantage in future exploitation bids, mining chamber Camimex warns that the absence of guaranteed access to concessions discourages private participation in exploratory work, which it argues should return to the private sector due to its high-risk nature.
- Singing its own tune, Camimex also warned that the reform to the National Water Law would effectively prohibit the construction of mining facilities across much of the country, particularly in mountainous regions where most mines operate, by restricting infrastructure such as waste deposits and water-management systems, jeopardizing production of essential minerals. The group called for a technically grounded regulatory framework that protects the environment while allowing mining to function under best practices, urging lawmakers to clarify that mine waste is safely contained without discharging into waterways and to account for Mexico’s complex geography, where blanket bans are unworkable and could push the country toward mineral import dependence. Camimex also emphasized the need for permits and continuous oversight of infrastructure on federal lands and noted that 71% of water used by its member companies last year came from recycled or wastewater sources. The government (correctly) points to numerous abuses of water concessions under the old law, claiming the changes in the new law will lead to a fairer distribution of water rights, by tightening government control.
- The Mexican government holds more than 22,200 mining exploration and extraction concessions, but roughly half, covering nearly 5 million hectares, show no reported activity, prompting the Economy Ministry to negotiate with companies to either begin exploration or return areas deemed unviable for exploitation. Officials noted cases in which firms control vast tracts but only develop a fraction while seeking additional concessions, leading the government to require full exploration of existing areas before granting new ones. With only about 5% of national territory explored to date, authorities have also begun revoking concessions, particularly from individuals and small companies that have stopped paying required mining fees, which collectively amount to roughly MXN 2 bn in unpaid obligations.
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