Mexico’s largest oil company is Petróleos Mexicanos (PEMEX), a state-owned public company incorporated as an independent agency of the federal government, which was established by a decree passed on June 7, 1938. Its fundamental objective is to centrally and strategically manage the oil industry’s activities in Mexico. PEMEX is a significant generator of economic resources, jobs, and opportunities for national development. It has been a critical player in boosting the country’s economic growth and industrial development since the second half of the 1970s (Grayson 1980).
Internally, this parastatal company is made up of four subsidiary bodies. Of these four, PEMEX Exploration and Production (PEP) centers on extraction and carries out the exploration, production, processing, and marketing of crude oil and natural gas in both domestic and foreign markets. It is divided into four operating regions: North, South, Northeast Marine (RMNE, for its Spanish acronym), and South Marine (RMSE, for its Spanish acronym).
In 1996, after some serious accidents took place in its facilities, PEMEX PEP sought to implement stringent security and environmental protection practices that aimed to identify the strengths and weaknesses of its security management. To achieve this, the Corporate Industrial Safety and Environmental Protection Division was created to develop and implement management systems in order to carry out safer and more environmentally friendly operations and incorporate best practices (Petróleos Mexicanos 2002).
In 2006, PEMEX developed a new model for sustainable development, which is part of its corporate strategy (Pemex Exploration and Production: Systems report, unpublished). The model’s objectives were to comply with environmental regulations, avoid environmental risks even in the absence of regulation, and ensure the viability and sustainability of business development plans, thus devising the future implementation of CSR guidelines (Petróleos Mexicanos 2006). Since joining the Global Reporting Initiative (GRI) and the Global Pact, PEMEX has sought to reconcile its business interests with the values and demands of civil society in areas related to human rights, labor rights, the environment, and anti-corruption (García-Chiang and Rodríguez 2008).
In the 2010–2025 PEMEX Business Plan, CSR was defined as one of the four lines of action for addressing its 23 major business challenges. The company seeks to use CSR to improve its image and relationships with stakeholders and incorporate environmental protection and social responsibility as key elements of its operation. Also, in External Affairs (AE, for its Spanish acronym) documents and annexes to contracts, PEMEX defines CSR as the willingness of companies to integrate policies, programs, and practices beyond their legal obligations, thus contributing to the sustainable development of society and improving the quality of life for individuals and their families.
Mexico’s 2008 energy reform focused on reforming the regulatory law of Article 27 of the national constitution to establish that PEMEX and its subsidiary entities could contract with individuals or corporate entities for labor and the provision of required services to improve the implementation of its activities. This was made known to other oil operators in the Mexican context, some of which already had contracts with Pemex. It was a new step forward regarding CSR.
This reform has allowed private companies to become more involved in the process of oil extraction and to implement Integrated Petroleum Exploitation Contracts (CIEP, for its Spanish acronym), which are overseen by the Secretariat of Energy and the National Hydrocarbons Commission (Comisión Nacional de Hidrocarburos, CNH). When the reform went into effect, social baseline studies became Social Impact Assessments (Dauzacker 2007) that met international standards. Moreover, CSR plans turned into Social Management Systems. At this point, we can see from experience that it is possible for private oil companies’ participation in CSR schemes to contribute to local development, but the application of CSR actions does not in itself imply an impact on local development.
In 2012, Pemex Exploration and Production (PEP) launched the first round of bidding for its Integrated Oil Exploration Contracts. The interest generated by this process among firms in the industry, both domestic and foreign, was reflected in 27 operator and service companies purchasing over 50 bidding packages in the three contractual areas (Pemex Exploración y Producción 2012). As a result of this process, private companies entered as Pemex partners to exploit fields in Tabasco. British companies, like Petrofac Facilities Ltd., won this round. This company, in particular, was awarded the Santuario and Magallanes blocks. Another winning company was the Texas firm Schlumberger, which was awarded the Carrizo block near the city of Villahermosa.
That same year, PEMEX announced the results of a second round of bidding for Integrated Contracts for Exploration and Production. This time, it was for mature fields located in the northern regions of Veracruz and Tamaulipas in which 28 companies participated. Monclova Pirineos Gas and its Oleorey subsidiaries won the San Andres block, Petrolíferos de Tierra Blanca won the eponymous Tierra Blanca block, Petro SPM Integrated Services was awarded the Pánuco block, Petrofac Facilities Ltd. won the Arenque maritime contract area (near the cities of Tampico and Madero) and the Egyptian company Pico-Cheiron Ltd. won the Altamira block in Tamaulipas.
In 2013, a third round of bidding was held in which three of the six blocks offered by PEMEX in the Chicontepec area under the concept of Integrated Contracts for Exploration and Production of Crude Oil—Amatitlán, Pitepec, and Miahuapan—were rendered null and void due to a lack of proposals. The remaining three blocks were allocated to Mexican subsidiaries of the U.S. companies Halliburton (Humapa) and Petrolite (Soledad) and the Mexican company Operadora de Campos DWF (Miquetla) (Petróleos Mexicanos 2013).
In December 2013, Mexico amended its constitution to allow both domestic and foreign private investment into the energy sector for the first time since its nationalization in 1938. The reforms now permit international energy companies to operate in Mexico and include provisions for competitive production-sharing contracts and licenses. On August 13, 2014, after the approval of the energy reform, the Secretariat of Energy presented three bidding processes for oil blocks, which were called rounds and identified as zero, one and 0.5. The first, Round Zero, stipulated that Pemex’s initial assignment was to choose the fields where it wished to work, either on its own or in alliance with a private initiative.
Round 0.5 involved contracts that Pemex and its contractors had the possibility of migrating to the new contractual modalities of exploration and extraction; specifically, these were the Comprehensive Exploration and Production Contracts (CIEP, for its Spanish acronym) and the Funded Public Works Contracts (COPF, for its Spanish acronym). Round One was the opening of processes in which private initiatives could participate without needing to associate with Pemex in a bid for oil exploration and production contracts for hydrocarbons.
The first phase of Round One, Aguas Someras, tendered 14 exploration contracts, the allocation of which was scheduled for July 15, 2015. The second phase, in September 2015, was comprised of nine fields in five areas located in the shallow waters of the Gulf of Mexico. The third phase of Round One, which took place in December 2015, was made up of landfills for the extraction of hydrocarbons. The blocks were grouped into three geographic areas identified as Campos Burgos, Campos Norte, and Campos Sur. The fourth phase included ten areas located in the deep waters of the Gulf of Mexico between the Lost Belt and Salt Basin oil provinces.
Round Two also had four phases. The first was for shallow water, and it resulted in joint ventures between international oil companies that were entering into the Mexican oil market. Phases two and three were dedicated to land fields, and for the last—named 2.4—Mexico’s National Hydrocarbons Commission reported the allocation of 19 of the 29 blocks in Perdido, Campeche and in the plains along the Gulf of Mexico.
In regard to Pemex’s three rounds of integrated contracts, Clause 19.8 and Annex 18 address issues related to the impact of oil operations on communities and specify that each company that wins a tender must spend 1% of its annual operating expenses on CSR actions in these main three areas: environment, social development, and economic development. This type of contract gave contractors the freedom to specify the amount to be invested in contributions to sustainable development in the areas where they work (Fig. 1).
The Energy Reform did not contemplate this clause, but it established important changes in the diagnosis, execution, and development of the social development projects that must be carried out by oil companies (Articles 118 and 121 of the Hydrocarbons Law, as well as those related to Section 4, 117, and 120 of the Electrical Industry Law). In this sense, the new law establishes that the Secretariat of Energy is responsible for complying with sustainability principles and respecting communities and human rights in places where energy sector projects are to be developed. It must also comply with social impact and sustainable development provisions, as established by the regulations, in addition to carrying out a Social Impact Assessment and obtaining all legal authorizations. In this regard, it should be emphasized that creating Electric and Hydrocarbons Industry Law regulations has translated into significant changes in social impact studies.
The mandatory establishment of a social management program following a Social Impact Assessment went well beyond the activities covered by the Integrated Oil Exploration Contracts (CIEPs). This included areas such as shallow and deep waters exploration and production; terrestrial seismic exploration; oil treatment and refining; transportation and storage of hydrocarbons, petroleum, and petrochemicals; distribution and sale of natural gas and oil; the compression, liquefaction, decompression, and regasification of natural gas; and the generation of electric energy.