On February 15 2016 the Energy Regulatory Commission (CRE) published in the Federal Register two regulatory instruments that are key to the development of the natural gas marketing sector in Mexico. In particular, the regulatory instruments aim to increase competition and expand value-added services for natural gas consumers.

The first instrument is the Methodology for the Determination of Maximum Prices for Natural Gas First-hand Sales. The pricing methodology supersedes the temporary methodology issued by the CRE under Resolution RES/524/2013. It is based on reference price indices in the United States (ie, Houston Ship Channel, Henry Hub and South Texas) and related differentials, transportation costs between the border at Reynosa and South Texas pipelines (which were substantially increased with respect to those contemplated in the previous pricing methodology) and transportation costs in Mexico. The new pricing methodology applies only to Mexican Petroleum (Pemex), but the CRE may in future approve and issue other pricing regulations applicable to other state productive enterprises or other entities undertaking first-hand sales of natural gas on behalf of the Mexican state.

The CRE has also published general administrative provisions for the marketing of natural gas under asymmetric regulatory conditions for Pemex, its subsidiary entities, affiliates and divisions and any other persons controlled by such persons. Under these provisions, Pemex must decrease its share in the natural gas marketing sector to no more than 30% of the total volume of natural gas sold as part of its current marketing activities, over a period of four years. To this end, Pemex must submit its proposed contract assignment programme for CRE approval within 90 calendar days of publication of the provisions. The programme must set intermediate-term goals to assign, in each of the first two years, at least 20% of the total natural gas volume marketed by Pemex.

For further information on this topic please contact Rogelio López-Velarde, Amanda Valdez, Daniela Monroy or Diego Campa at López Velarde, Heftye y Soria by telephone (+52 55 3685 3334) or email (rlopezv@lvhs.com.mx, avaldez@lvhs.com.mx, dmonroy@lvhs.com.mx or dcampa@lvhs.com.mx). The López Velarde, Heftye y Soria website can be accessed at www.lvhs.com.mx.

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