| Country: |
Mexico |
| Organisation: |
National Hydrocarbons Commission (CNH) |
| Regime Scope: |
The State enacted several legal and administrative reforms in the hydrocarbon energy sector in 2008. The main objective was to improve hydrocarbons' policy definition and implementation by creating a new technical and regulatory agency in the hydrocarbon sector - a check and balance system between PEMEX and the Ministry of Energy.
The CNH regulates the exploration and extraction of hydrocarbons, in beds or reservoirs, whatever their physical state, including their intermediate states, and that are components of crude mineral oil, are associated with it or result from it, as well as processing activities, transportation and storage directly related to hydrocarbon exploration and production projects. This is done by delivering dictums of all PEMEX's projects before the beginning of exploration and exploitation activities. With these dictums, the CNH is responsible for safeguarding the nation's hydrocarbons and the means of extracting them. It is worth noting that the National Hydrocarbons Commission technical opinions are not influenced by any operator or institution working in the oil sector. |
| Administering Agency /Arrangements: |
The National Hydrocarbons Commission is established as a decentralized agency of the Ministry of Energy, constituted by a Governing Body composed of one President Commissioner and four Commissioners appointed by the Federal Executive. |
| Legislation Type: |
CNH must enact legislation in order to:
- Assess all E&P activities to:
- Provide technical assessments and follow up.
- Revise the internal standards and procedures of PEMEX, as well as the management systems to enforce them.
- Introduce specific technical regulations.
- Supervise the regulation observance.
- Approve hydrocarbon reserve estimates within the country.
- Set technical elements to design and define Hydrocarbon Policy.
Recent regulations and guidelines enacted by the CNH:
- Security procedures and standards for exploration and exploitation projects in deepwater.
- Regulations to reduce the flaring and venting of natural gas.
- Technical guidelines for the design of new projects.
- Guidelines to acknowledge the certification of oil and gas reserves made by PEMEX and a third party.
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| Extent Of Government Approval: |
Legal framework establishes that PEMEX must have a dictum or technical opinion from the CNH before executing any E&P project. Also, the Ministry of Energy (SENER) must have this technical opinion to issue an exploration or exploitation permit.
This technical opinion, by Law, must ensure that the exploration or exploitation of a project will be done according to the best international practices, seeking to promote the adoption of measures to ensure the optimal and safe exploitation of hydrocarbons, ensuring environmental protection and the necessary industrial safety conditions.
To achieve its objectives, the National Hydrocarbons Commission shall strictly adhere to and support the hydrocarbons policy, the National Energy Strategy and programs issued by the Ministry of Energy.
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| Nature of Duties Imposed: |
The Constitution establishes that all activities related to mineral and hydrocarbon activities are responsibilities of the State.
According to that mandatory provision, the General Congress (Article 3 of the CNH Law) establishes that the Commission must promote that PEMEX's exploration and production projects are carried out pursuant to the following bases:
- Increase the recovery factor and obtain the maximum volume of crude oil and natural gas in the long term
- Replace the Nation's hydrocarbon reserves
- Use the appropriate technology
- Environmental protection and the sustainability of natural resources
- Ensure the best industrial safety conditions
- Minimize flaring and venting of gas and hydrocarbons
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| Physical Objects in the Regime: |
The National Hydrocarbons Commission is in charge of regulating the exploration and exploitation of hydrocarbons onshore and offshore. Petróleos Mexicanos (PEMEX), currently the only operator in Mexico, is operating 7846 wells onshore and in shallow water. Additionally, PEMEX has 15 exploratory wells in deepwater.
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| Assurance Mechanisms: |
CNH has enacted a new regulatory framework for deepwater exploration and exploitation. Through this regulation, PEMEX has to submit a safety case for its deep water projects for technical assessment.
CNH provides technical assessment on the following aspects:
- Selection and evaluation of technologies for safety
- Performance indicators
- Identification and evaluation of risks (safety)
- Selection and evaluation of critical points risk procedures
- Evaluation of financial coverage in case of oil spills.
- Oil spill response plans.
Concerning shallow water and onshore projects, the National Hydrocarbons Commission establishes technical guidelines and makes technical assessments in order to make sure that the exploration and exploitation projects of Petróleos Mexicanos and its subsidiary bodies are performed pursuant to the following bases:
- Successful exploration and incorporation of reserves.
- Selection of safe technologies to be used that optimize the operation of projects.
- Identification and evaluation of risks.
- Provide technical references according to best practices.
- Monitor performance indicators related to fields' extraction rates and recovery factors.
- Ensure environmental protection
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| Financial Basis: |
The operator must pay the CNH for its work as regulator. Recently, the General Congress approved a specific amount of this payment that will enter into force legally by 2012.
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| Environmental Regulation Responsibilities: |
Mexico has a specialized regulatory agency for environmental aspects (SEMARNAT). However, CNH must enact technical regulations (standards and thresholds) in order to avoid environmental risks caused by the exploration and exploitation of hydrocarbons.
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| Oil Spill Response: |
There are five different agencies that have the responsibility to react in an oil spill scenario.
As part of the fulfillment of the CNH's regulation, PEMEX is required to submit to the Commission a plan(s) for response to safety related emergencies including an oil spill response plan.
In the event of a petroleum spill from its installation(s), PEMEX is responsible, as soon as possible, to:
take all reasonable measures consistent with safety and the protection of the environment to prevent any further spill;
repair or remedy any condition resulting from the spill, and;
reduce or mitigate any danger to life, health, property or the environment that results or may reasonably be expected to result from the spill.
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| Transparency: |
According to the Law, all governmental entities must reveal all public information. In this regard, all CNH's technical opinions, resolutions and guidelines are on display on its public website.
The exceptions to this legal principle is information related to:
- National security.
- Legal procedures.
- Personal data.
The legislation prescribes, however, that Operator information shall generally be held in confidence with certain exceptions.
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| Profile Author: |
Lourdes Jamit Sentíes
Assistant Director, Hydrocarbons General Direction
National Hydrocarbons Commission
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| Profile Date: |
31 January 2011 |
