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Summary“Mexico Upstream Fiscal and Regulatory Report - Government Delays Deepwater Bidding After Shallow-Water Disappointment”, GlobalData's latest release, 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 new contractual frameworks introduced under the country's energy reform, 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 fiscal terms governing upstream oil and gas operations in Mexico- Detail on legal framework and governing bodies administering the industry- Levels of upfront payments and taxation applicable to oil and gas production- Details of the licensing process in ‘Round 1’- Explanation of production sharing mechanisms in Production Sharing Agreements- Information on the special fiscal regime applicable to PEMEX- Assessment of the fiscal regime's attractiveness to investors- Outlook on future of fiscal and regulatory terms in MexicoReasons to buy- Understand the complex regulations and contractual requirements applicable to Mexico's upstream oil and gas sector- Evaluate factors determining profit levels in the industry- Identify potential regulatory issues facing investors in the country's upstream sector- Utilize considered insight on future trends to inform decision-making
1 Table of Contents1 Table of Contents 11.1 List of Tables 21.2 List of Figures 22 Regime Overview 33 Fiscal Take Assessment 74 Key Fiscal Terms - Production/Profit Sharing Contract 94.1 Upfront Payments 94.1.1 Royalties 94.1.2 Exploration Rental Fees 94.1.3 Hydrocarbon Activity Tax 94.2 Cost Recovery 104.2.1 Cost Recovery Limit 104.2.2 Recoverable Costs 104.2.3 Uplift on Cost Recovery 104.3 Profit-Sharing 104.4 Direct Taxation 114.4.1 Corporate Income Tax 114.4.2 Deductions and Depreciation 114.4.3 Withholding Tax 114.5 Indirect Taxation 114.5.1 Value Added Tax 114.5.2 Customs Duties 114.5.3 Landowner Compensation 114.5.4 Carbon Tax 114.6 Abandonment Fund 125 Key Fiscal Terms - Royalty and Tax License 125.1 Upfront Payments 125.1.1 Signature Bonus 125.1.2 Royalties 125.1.3 Additional Royalty 125.1.4 Exploration Rental Fees 125.1.5 Hydrocarbon Activity Tax 125.2 Taxation 125.3 Abandonment Fund 136 Key Fiscal Terms - Pemex Assignment Regime 136.1 Upfront Payments 136.1.1 Royalties 136.1.2 Exploration Rental Fees 136.1.3 Hydrocarbon Activity Tax 136.2 Profit Sharing Duty 136.3 Taxation 137 Regulation and Licensing 147.1 Legal Framework 147.1.1 Governing Law 147.1.2 Contract Type 147.1.3 Title to Hydrocarbons 147.2 Institutional Framework 157.2.1 Licensing Authority 157.2.2 Regulatory Agency 157.2.3 National Oil Company 157.3 Licensing Process 167.3.1 Migration of Assignments 167.3.2 Licensing Rounds 167.3.3 Registration and Prequalification 167.3.4 Bidding Requirements 177.3.5 Evaluation of Bids 207.4 License Terms 207.4.1 Duration and Relinquishment 207.4.2 Exploration Obligations 207.4.3 Local Content 217.4.4 State Participation 218 Outlook 229 Contact Information 231.1 List of TablesTable 1: Mexico, Fiscal and Regulatory Summary, 2015 3Table 2: Mexico, Contractual Price for Crude Oil, Round 1 - Shallow Water (First Call) 9Table 3: Mexico, Additional Royalty Adjustment Factor, 2015 12Table 4: Mexico - Pemex Assignment Regime, Profit Sharing Duty Rates (%), 2015 onwards 13Table 5: Mexico, Round 1 Schedule, 2015 16Table 6: Mexico, Round 1 Prequalification Requirements, 2015 17Table 7: Mexico, Round 1 Minimum Work Commitments, 2015 18Table 8: Mexico, Round 1 Work Units by Activity, 2015 19Table 9: Mexico, Work Unit Value, 2015 21Table 10: Mexico, Round 1 Local Content Requirements (%), 2015 211.2 List of FiguresFigure 1: Mexico, Regime Flow Chart - Production/Profit Sharing Agreement, 2015 4Figure 2: Mexico, Regime Flow Chart - Royalty and Tax License, 2015 5Figure 3: Mexico, Regime Flow Chart - Pemex Assignment Regime, 2014 6Figure 4: Mexico, PSA Bid Comparison - 100mmbbl Field (Shallow-Water Extraction Terms), 2015 7Figure 5: Mexico, Indicative NPV10/boe and IRR Comparison, Regional Peers, 2015 8Figure 6: Mexico, Legal Framework, 2015 14Figure 7: Mexico, Institutional Framework, 2015 15