The CNH publishes amendments to the Guidelines that Regulate the Exploration and Development Plans for the Extraction of Hydrocarbons

Today, August 20, 2021, the resolution whereby the National Hydrocarbons Commission (Comisión Nacional de Hidrocarburos) (CNH) modifies the Guidelines that Regulate the Exploration and Development Plans for the Extraction of Hydrocarbons (the Guidelines), was published in the Federal Official Gazette, which will become effective on the business day following its publication (the Amendment).

According to the Amendment, these modifications were issued, among other things, to broaden the assumption that allows Operators to perform early production activities. Some of the most relevant modifications comprise the following aspects:

Definitions

Previously undefined terms such as Area of Interest, AR Allocation (Asignación AR), Initial Appraisal Report, Early Production, Transition Program, Annual Operation Program and various reservoir definitions such as Shared Reservoir, Unconventional Reservoir and Unconventional Shale Reservoir, are now defined.

Annual Operation Program

The Annual Operation Program is created and is applicable only for the AR Asignatarios, where the projection of activities to be executed in a twelve-month period is integrated with the associated costs and the expected production forecast. It also includes a description of the activities for those asignaciones that have not yet been awarded.

Initial Appraisal Report

Once the Appraisal Program or Exploration Plan activities are concluded, an Initial Appraisal Report must be prepared, whereby Operators may access a Transition Program to carry out Early Production activities or preparatory activities for the Extraction. Operators with a favorable pronouncement from the CNH to the Appraisal Report may not incorporate the Reserves associated to the relevant Discovery.

Transition Program

The purpose of the Transition Program is to achieve continuity in the production of the awarded areas. Operators may carry out Early Production activities when submitting a Transition Program. Likewise, it allows Operators to carry out the Early Production of a Reservoir derived from a discovery or from the performance of preparatory activities for the Extraction after the submission of the Initial Appraisal Report.

Annexes

Annexes I, II, II and IV also suffered several changes to reflect the content of the Amendment; therefore, Operators must ensure their deliverables to CNH comply with such new requirements.

Capitalized terms not defined in this Note shall have the meaning ascribed to them in the Guidelines and the Amendment.

For further information regarding the content of the Amendment and its impact on upstream projects in Mexico, please contact:

César Fernández | International Partner
Norton Rose Fulbright US MX, S.C.
Tel. +52 55 3000 0604 | Cel. +52 1 55 5438 2601
cesar.fernandez@nortonrosefulbright.com