CNH Publishes Administrative Rules for E&P Bidding Rounds

On November 28, 2014, the Mexican National Hydrocarbons Commission (“CNH”) published in the Mexican Federal Official Gazette a resolution containing the administrative rules for the bidding process and granting of contracts for the exploration and production of hydrocarbons (the “Rules”).

The main provisions of the Rules are summarized below:

• Bidding Process Committee. All phases and proceedings of the bidding process will be conducted by a committee comprising CNH members and appointed by the CNH president, including a coordinator, secretary and other required staff. The Committee may be assisted by external firms retained by the CNH.
• Electronic Media. The bidding rounds may be conducted using electronic media, ensuring the authenticity and confidentiality of information. The bidding process information will be published on the web sites of the CNH or other official entities.
• Bidding Process Phases. The bidding process will be divided into the following phases:
  • Publication of the bidding invitation;
  • Publication of the bidding terms;
  • Access to the information data room;
  • Clarifications of the bidding terms;
  • Prequalification;
  • Site visits to the contract area, if applicable;
  • Delivery and opening of offers;
  • Granting and award of contracts;
  • Contract execution; and
  • Any other phases pursuant to law or required for the bidding process.
• Bidding Terms. The bidding terms will establish clear, simple, objective and impartial requirements. The CNH will include the following information in the bidding terms:
  • General information on the CNH;
  • Objectives of the bidding process;
  • Contracting model;
  • Bidding process calendar;
  • Bidding process phases;
  • Offered contract area;
  • Clarification mechanism for bidders and, if applicable, modification of the bidding terms, which may be made by electronic means;
  • Mechanism by which the CNH can request clarification regarding documents submitted by bidders;
  • Prequalification criteria and supporting documentation, pursuant to technical requirements established by the Ministry of Energy for each bidding round;
  • Economic terms pursuant to the fiscal requirements established by the Ministry of Finance;
  • Awarding criteria and mechanisms to select the winning bidders;
  • Manner in which offers shall be delivered and requirements for joint offers;
  • Dismissal events for offers pursuant to law;
  • Form, terms and amounts of guarantees;
  • Draft contract;
  • Contract duration;
  • Minimum work program for each contract area;
  • Provisions for the modification of the bidding terms;
  • Confidentiality provisions;
  • Required guarantees; and
  • Other terms established by law.
• Prequalification Requirements. The Ministry of Energy shall establish experience, technical, financial, legal and operational requirements for each bidding round. The supporting documentation shall:
  • Refer to the requirements, preferably in objective and quantifiable terms;
  • Meet the necessary formalities pursuant to law;
  • Be requested in terms that are usually or generally accepted pursuant to international practices;
  • Be verifiable; and
  • Be preferably of a public nature, with the option to request translations, interpretations, certifications or opinions from authorities or third-party specialists.

The CNH will evaluate the prequalification documents submitted by the interested parties pursuant to the bidding terms. The CNH will then publish a list of the prequalified parties.

• Offers. In regard to the submission of offers, the rules establish that:
  • An interested party may only submit one offer per contract area;
  • A prequalified party may not withdraw or terminate its offer after submission.
• Contract Award. The contract award shall include the following information:
  • Results of the bidding process and any offers that were dismissed;
  • Name of the winning bidder;
  • Name of the party in second place; and
  • Deadline to execute the contract and submit the guarantees.

The contract award shall exclude any reserved or confidential information pursuant to law. The CNH may revoke the contract award if it is demonstrated that the winning bidder submitted false information.

• Cancellation of a Bidding Process. The CNH may cancel a bidding process in whole or in part if any of the following events occur:
  • No offers are submitted in the bidding process;
  • The participating parties do not meet the prequalification requirements;
  • The economic offers are not acceptable; or
  • Other circumstances included in the bidding terms arise.
• Contract Execution. The bidding terms will provide that E&P contracts may only be formalized with entities that are legally incorporated in Mexico or with Mexican state-owned productive entities.
• Fees. The CNH will require the payment of fees in connection with the following, among others:
  • Registration, qualification requirements, offer receipt and awarding of E&P contracts;
  • Access and technical assistance to view and download data related to the contract areas.