December 03, 2020

Mexican Authorities Propose New Rules for Import and Export Permits Granted by SENER: Hydrocarbons and Petroleum Products

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On December 1, 2020, the Ministry of Energy (“SENER”) and the Ministry of Economy presented a draft resolution before the National Commission for Regulatory Improvement (“CONAMER”) the “Resolution that Establishes the Goods Whose Import and Export are Subject to Regulations Issued by the Ministry of Energy” (the “Draft Resolution”), which may be consulted here.

The Draft Resolution, will supersede the current permitting regulation for import and export of hydrocarbons and petroleum products, originally published by SENER in the Federal Official Gazette (“DOF”) on December 29, 2014 (as amended, the “Current Regulations”).  In parallel, the Draft Resolution also regulates other goods (i.e. softwares, nuclear and radioactive material).

The principles behind the Draft Resolution contemplate a regulatory environment that is very different from the 2014 energy reform regulations.  The Draft Resolution constrains the procedure for filing and obtaining import and export permits and establishes additional requirements.  As an example, applicants will have to demonstrate that the export of hydrocarbons will not impact the domestic supply in the mid and long term.  This is an extremely vague requirement that could likely result in disagreements, delaying the issue of such permits and the activities of the relevant parties.  The fact that a permit will be deemed rejected if SENER fails to issue a resolution on its application is another serious difference with the Current Regulations.  Finally, the fact that state-owned companies, such as Pemex, may be consulted to determine the convenience of any such permits may also be problematic and add uncertainty to the process.

It is important that companies that may be affected by this new regulation provide comments within the public consultation timeline so that they can be considered before the Draft Resolution is published and enters into effect.

In a nutshell, if enacted, the Draft Resolution will:

    1. Change the procedure to be followed for filing and obtaining permits.
    2. Amend the requirements for obtaining import or export permits.
    3. Eliminate the 20 year long-term import and export permits.
    4. Increase the types of products that will be subject to import permits.

The most relevant amendments and additions to the procedure for filing and obtaining import and export permits for hydrocarbons and petroleum products are the following:

    • The following additional requirements must be presented by the applicants of import permits: (i) submission of a document that evidences compliance with the relevant administrative, tax and customs obligations, (ii) a monthly projection of the volume and import costs of the goods, and (iii) marketers and distributors of gasoline, diesel or jet fuel selling to service stations or end users shall provide evidence of compliance with the obligations established under the Public Policy for Minimum Storage of Petroleum Products.
    • Applicants for export permits must demonstrate that the requested export will not impact the domestic supply of the product in the mid and long term.
    • For all 5-year permit applications, in addition to the supply chain documental evidence, the applicant must prove its “contribution to the development or expansion of storage and/or transportation infrastructure” that corresponds to the activity of the permit application.
    • In any case that the applicant fails to justify the need for the requested volume, SENER may grant the applicable permit with the volume that SENER considers appropriate.
    • 1-year permits may be extended by two additional periods and 5-year permits may only be extended once.
    • The origin or destination countries indicated in the applications will only be indicatives and may vary in practice without having to amend the permit.
    • Contrary to the Current Regulation, if SENER fails to issue a resolution within the statutory term (12 business days), the application shall be deemed rejected.
    • SENER may declare the expiration of a permit in the absence of transactions for a consecutive period of 30 calendar days for 1-year permits or 365 calendar days for 5-year permits.
    • The list of goods that is subject to these permits is expanded, including products such as: (i) undenatured ethyl alcohol with an alcoholic strength greater than or equal to 80% by volume, (ii) ethyl alcohol and (iii) benzene.
    • Under the review procedure, SENER includes the possibility to consult state-owned companies to determine the convenience of granting the permits.
    • SENER has a discretional power to request any other additional information to applicants or permit holders relying on its supervision authorities.
    • Other considerations: (i) the valid permits granted upon the effective date shall remain effective until the conclusion of their term and will be governed by the Current Regulation, (ii) the permit applications or extension requests submitted prior to the effective date of the Draft Resolution shall be reviewed until their conclusion in accordance with the regulations that were effective on the date on which the application was submitted, and (iii) once the Draft Resolutions enters into effect, the Current Regulation will be repealed.

Since the Draft Resolution, if enacted, could have a transcendental impact on the Mexican market, the Ministry of Economy and SENER also submitted a Regulatory Impact Analysis considering a “material impact”.  In view of the foregoing, the Draft Resolution shall remain available for comments by the general public in CONAMER’s website for a period of at least 20 business days, despite the fact that text of the Draft Resolution indicates December 28, 2020 as the date of publication.

 

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