Summary of Updates and Highlights in the Mexican Energy Sector, July-August 2017

As part of the implementation of the Mexican energy reform of 2013, several new regulations and administrative guidelines affecting the hydrocarbons and power industries were issued during July-August 2017. These are of particular importance to oil and gas producers, midstream companies and power generators, traders and others looking to invest or expand operations in Mexico’s dynamic energy sector. This alert describes the key developments in the Mexican energy legal framework pertaining to oil and gas, power, and renewable energy during the months of July and August 2017.

I. Hydrocarbons

July 11, 2017. The Areas of Campeche and Yucatan are declared Natural Gas Distribution Zones. The Energy Regulatory Commission (“CRE”) declared the following municipalities of Campeche and Yucatan as natural gas distribution zones: Escarcega, Champoton, Del Carmen, Campeche, Conkal, Kanasin, Merida, Progreso, Ucu and Uman.

July 20, 2017. Bidding Process CNH-R02-C04/2017. The Energy Regulatory Commission (“CRE”) published the Call for the 2.4 Bidding Process. This new bid round comprises 30 deepwater blocks for exploration in the Perdido Area, Salinas Basin, Mexican Mountain Chains (Cordilleras Mexicanas) and the Yucatan Platform, covering collectively 70,844 km². The submission and opening of proposals is scheduled for January 31, 2018. 

July 21, 2017. The CNH published the results of Bid Rounds 2.2 and 2.3. The awarded parties are the following:

ROUND 2.2

ROUND 2.3

August 10, 2017. Pemex Logistics Organizational Statute. Pemex Logistics published its new Organizational Statute containing its basic structure, divisions and the authorities of their officers. The Organizational Statutes repeals the former statues dated October 29, 2015.

August 18, 2017. NOM-003-ASEA-2016. The Environmental Agency for the Hydrocarbons Sector (“ASEA”) published NOM-003-ASEA-2016 which establishes the specifications and technical requirements for the design, construction, operation and maintenance and decommissioning of natural gas and liquefied petroleum gas pipeline distribution systems.

August 23, 2017. NOM-010-ASEA-2016. ASEA published NOM-010-ASEA-2016 which establishes the specifications and technical requirements for the design, construction, operation, maintenance and decommissioning of load terminals for compressed natural gas containers and retail stations.

August 24, 2017. CENAGAS O&M natural gas pipelines. The National Center for Natural Gas Control (“CENAGAS”) published the Bidding Guidelines to award contracts for operation and maintenance of natural gas pipelines in the states of Veracruz-Puebla-Tlaxcala-Estado de Mexico-Hidalgo, Chihuahua-Coahuila-Durango and Sonora.

August 28, 2017. Pemex Ethics Code and Code of Conduct. Pemex published its new Ethics Code and Code of Conduct regulations, containing the behavior rules that all of its employees must follow. These Codes are applicable for all Pemex’s subsidiaries and affiliates.

August 30, 2017. Guidelines for the Protection and Conservation of National Waters in Hydrocarbon Exploration and Production Activities in Unconventional Blocks (Fracking). These Guidelines apply to exploration and production activities in unconventional fields to help preserve national waters and inherent public property. These Guidelines contain the terms and conditions to use national waters in fracking activities.

August 31, 2017. Land Use Notice to SEDATU. The Agrarian, Urban and Land Development Ministry (“SEDATU”) published the format to notify the beginning of negotiations with land owners according to the procedure set forth in the Hydrocarbons Law for the use of land to carry out the following hydrocarbons activities: (i) recognition, (ii) exploration, (iii) production and (iv) transportation.

II. Power

July 27, 2017. Entry into Force of the CFE Guidelines for Acquisitions, Leasing, Services and Works. These Guidelines establish the procedures that CFE and its subsidiaries shall comply to acquire new services with third parties.

July 28, 2017. Financial Transmission Rights (“FTRs”) Auction Guidelines. The National Energy Control Center “(CENACE”) published the Guidelines which establish the terms and conditions to carry out Financial Transmission Rights Auctions which are expected to begin early 2018.

August 29, 2017. Operational Guidelines for the Reliability Committee. The CRE published the Guidelines for the Reliability Committee which purpose is to issue opinions, review and propose changes to the Network Code (Código de Red) as well as other aspects related to the efficiency, security, continuity and reliability of the power grid. This Committee is formed by representatives of different participants of the electric industry, including, power generators, transporters, distributors, load centers, academic institutions and suppliers of electric infrastructure.