In response to the challenges that the Petroleum Operators have faced as a consequence of the sanitary emergency SARS-CoV2 and the suspensions of legal terms, today CNH´s Governing Body approved the Agreement whereby the National Commission of Hydrocarbons establishes different measures to promote the development of petroleum activities (the ‘Agreement’), which effects are general, meaning applicable to any E&P Contract valid.
The Agreement´s purpose is to grant legal certainty to the Petroleum Operators to carry on the petroleum activities in an efficient matter and continuously according to the Plans and Programs approved by the CNH. In this regard, the Agreement recognizes the Force Majeure in the same terms that the health authority, and for the following effects:
1) The obligations associated to the Minimum Work Commitment either in the Exploration, Appraisal or Development Period will not be considered as enforceable during the Suspension Period. Therefore, the mentioned Periods will be extended equal to the length/duration of the Suspension Period.
*The Suspension Period started on March 24, 2020 and will conclude either until CNH publishes its conclusion in the Official Gazette or 6 months after the publication of the Agreement.
This measure does not affect the maximum overall period of the E&P Contracts, the fulfillment of other contractual and regulatory obligations, neither imply a release of paying taxes and royalties.
Petroleum Operators must submit before CNH, within the 20 business days after the Suspension Period concludes, their activities chronogram updated, and the Performance Guarantee valid, if applicable.
2) The period of Transitions Programs will be extended equal to the length of the Suspension Period.
3) The presumptions to amend Appraisal or Pilot Programs, Exploration or Development Plans provided by the Guidelines that regulate the Plans will not be enforceable during the Suspension Period.
The approval of this Agreement resolved the pretentions of the 25 force majeure procedures, and the 13 Exploration and Appraisal extensions requested by different Petroleum Operators, therefore these procedures are concluded.
Regarding Pemex´s Asignaciones, CNH provided technical assistance to SENER recommending similar measures to the mentioned herein in order to define the most adequate mechanism to extend exploration and appraisal period of the Entitlements, an comply with the corresponding minimum work commitments.
The Agreement will be published in the Official Gazette.
We will be glad to assist you regarding this issue or any other queries you may have.
Sources:
29th EO Session, CNH’s Governing Body
Official Gazette – 24/03/20.
By Layla Vargas, General Director at Muvoil Consulting
llayla.vargas@muvoil.com
Muvoil Consulting is a group of specialists in the O&G sector: legal, fiscal, social and environmental. Our multidisciplinary approach allows us to design strategic solutions that can unravel the most complex regulatory and transactional challenges that a petroleum project can face.