August 25, 2021

Mexico – CNH Publishes Amendment to Guidelines that Regulate Exploration and Development Plans for the Extraction of Hydrocarbons

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On August 20, 2021, the National Hydrocarbons Commission (Comisión Nacional de Hidrocarburos,"CNH") published in the Federal Official Gazette the Resolution CNH.E.22.008/2021 by which several provisions of the guidelines that regulate the Exploration and Development Plans for the Extraction of Hydrocarbons are modified, added and repealed (the "Resolution").

The amendments to this secondary regulation have different purposes, which are summarized as follows:

I. In order to initiate the different administrative procedures contained in the amended guidelines, the requesting parties must certify the payments via the e5cinco platform.

II. The definition of “shared reservoir” is expressly included.

III. A new type of area allocation is included: the “AR Allocations,” which will allow awarding a contract area directly, prior to its official bidding by the Mexican State. This type of area allocation will allow early extraction activities or to carry out preservation activities in the allocated area, including its wells and materials.

a. The oil operators of an AR Allocation must present an Annual Operating Program, which will be subject to approval by CNH (in a similar fashion to the existing assessment, work and transition stages), but in this case, the required plan will contain details on the activities to be carried out during a 12-month period.

b. When oil operators (of all areas) make a relevant discovery in their area, they will have the possibility that, by submitting an Initial Assessment Report, the operator may be allowed to access a Transition Program to carry out early-production activities or preparatory to extraction if the operators consider it feasible and the CNH approves it.

IV. The Resolution also includes the possibility that the Transition Programs may be extended for up to two years in the case of offshore fields. Likewise, new activities can be included in these transition plans.

V. The aforementioned changes will, in turn, have corresponding changes to the formats being filled, when applicable.

The Resolution is primarily intended to give oil operators more flexibility to perform activities prior to bidding them out.

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