LEGAL RESEARCH Session Laws United States Statutes At Large Laws Of Washington.
Opening Remarks - NORWEP. The Energy Reform ! Amendments to the Constitution on 20 Dec 2013 !...
Transcript of Opening Remarks - NORWEP. The Energy Reform ! Amendments to the Constitution on 20 Dec 2013 !...
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Opening Remarks
“Over the next four years, we will see accelerated growth for a country (Mexico) with massive oil and
gas resources, excellent infrastructure, a transparent investment framework, and a new hunger for foreign partners. In short, it is the
largest energy opportunity in the world today-‐-‐and the door has just been opened.”
CEO Steve Hanson, InternaGonal FronGer Resources Corp. (hJp://oilprice.com/Energy/Energy-‐General/Why-‐Mexicos-‐Oil-‐Reform-‐Is-‐A-‐Huge-‐Opportunity-‐For-‐Investors.html
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1. The Energy Reform § Amendments to the Constitution on 20 Dec
2013 § Creation of 9 new laws and amendment of 12
existing statutes (Secondary Laws) § Open the Oil & Gas Industry to private
interests
§ Goal à to increase production
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2. New Institutional Energy Framework
Source: Gabriel Heller Green, Head of Investor RelaGons Office, SENER (hJps://www.slideshare.net/EIenergyintel/mexico-‐government-‐bid-‐round-‐briefing/4 3
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3. Round Zero
§ Pemex was awarded 480 blocks through “Entitlements”.
§ They can explore them on their own or through JV.
§ Pemex will remain a very important player in the Oil and Gas Industry.
§ To perform the Entitlements Pemex or any State Productive Enterprise (“SPE”) may enter into service contracts with private companies (“Pemex Contracts”).
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3. Round Zero
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3. Contracts with Pemex
§ Pemex Law § Regulatory Law § General Contracting Norms § Favors tendering process § Migration of Pemex contracts with the
authorization from the Ministry of Energy § Purpose: form JVs
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3. Pemex JV Agreements
§ Must be formed through public tenders admin is tered by the Hydrocarbons Commission.
§ Pemex issues an opinion for the technical aspects of the bid.
§ Pemex intervenes in the prequalification process of the bidding process to secure that the partner complies technically.
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3. Pemex Associations (Farm-Outs) CNH-‐A1-‐Trion/2016 Award 7 Dec 2016 Contract executed 3 March 2017
MigraGon of enGtlements Cinturón Subsalino-‐10 & Cinturón Subsalino-‐11 to a Contract § License Contract for 35 years § Pemex partner for E & P of 1,285 sq km of deep waters in the Gulf of Mexico
§ 10 companies were prequalified § Risk-‐sharing with Pemex 8
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3. Pemex Associations (Farm-Outs)
CNH-‐A1-‐Trion/2016
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3. Pemex Associations (Farm-Outs) CNH-‐A2-‐AYIN-‐BATSIL/2017 (on-‐going bid) Award expected June 19
§ MigraGon of enGtlements Campo Ayín & M-‐Xulum-‐Ayín to a Contract
§ ProducGon Sharing for 30 years (+2 x 5 Years) § Pemex partner for E & P of 1,096 sq km of shallow waters in the Gulf of Mexico
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CNH-‐A2-‐AYIN-‐BATSIL/2017.
3. Pemex Associations (Farm-Outs)
CNH-‐A2-‐AYIN-‐BATSIL/2017
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•
3. Pemex Associations (Farm-Outs)
12
2017
Ayín-‐Batsil
Ovario
Cárdenas-‐Mora
Ayatsil Tekel-‐Utsil
Chicontepcec
7 Inland (North & South
TOTAL: 12
2018
6 Shallow Waters (North)
64 Inland (North & South)
86 Non Associated Gas (Burgos & Veracruz)
TOTAL: 156
Source: Pemex Business Plan 2017-‐2021
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4. Rounds 1 and 2
§ E&P Contracts for all areas not granted through enGtlements.
§ These Contracts could be entered between: (a) Pemex or SPE alone; (b) Pemex or SPE’s in JV or associaGon with private companies; or
(c) Private Companies alone, or through consorGums or JV.
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CONTR
ACTO
R’S
INCO
ME
LICENSE PRODUCTION SHARING
PROFIT SHARING
SERVICE
Sale of Extracted Hydrocarbons
In cash: Cost recovery plus a porWon of the operaWng income
In Kind: Cost recovery plus a porWon of the
operaWng income
Cash
Signature bonus
Exploratory Phase Fee
Exploratory Phase Fee
Exploratory Phase Fee
Exploratory Phase Fee
RoyalWes RoyalWes RoyalWes RoyalWes
A Payment consisWng of a percentage of the contract value of the
hydrocarbons produced.
A percentage of the operaWng profit
A percentage of the operaWng profit.
4. Types of E&P Contracts GO
VERN
MEN
T’S
INCO
ME
Source: Law of Hydrocarbons 14
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4.1 Round 1 (1.1)
a) L01/2015 à Shallow waters
§ ProducGon sharing contracts § 14 E&P blocks § 18 individual companies and 7 consorGums took part § 2 contracts awarded § Contracts executed 4 Sep 2015
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4.1 Round 1 (1.1)
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4.1 Round 1 (1.2)
(b) L02/2015 à Shallow waters
§ ProducGon sharing contracts § 5 producGon blocks § 15 companies associated in 9 consorGums took part § 3 contracts awarded § Contracts executed on 30 Nov 2015 and 07 Jan 2016
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4.1 Round 1 (1.2)
§ ProducGon sharing contracts § 5 producGon blocks § 15 companies associated in 9 consorGums took part § 3 contracts awarded § Contracts executed on 30 Nov 2015 and 07 Jan 2016
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4.1 Round 1 (1.3)
(c) L03/2015 à Inland • License contracts • 25 producGon blocks, some are E&P • 25 contracts awarded (100%) • Contracts executed on 10 May 2016 and 25 Aug 2016
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4.1 Round 1 (1.3)
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4.1 Round 1 (1.4)
d) L04/2015 à Deep waters § 10 E&P blocks § 26 pre-‐qualified companies (16 operators and 10 non-‐operators)
§ 8 contracts awarded on 5 & 6 December 2016 § ExecuGon of contracts 28 February and 10 March 2017
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4.1 Round 1 (1.4)
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4.2 Round 2 (2.1)
(a) L01/2016 à Shallow waters § ProducGon sharing contracts § E&P of 15 areas in the Gulf of Mexico (8,908 sq km)
§ Term: 30 years, can be extended for up to 10 more
§ 25 Companies were interested, 23 have started Pre-‐qualificaGon process
§ Bid published 20 July 2016; award expected by 19 June 2017
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4.2 Round 2 (2.1)
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4.2 Round 2 (2.2)
(b) L02/2016 à Inland § License contracts § E&P of 12 inland blocks (5,066 sq km) § Term: 30 years, can be extended for up to 10 more
§ 16 companies have been interested, 8 have started pre-‐qualificaGon process
§ Bid published on 24 Aug 2016; award expected by 12 July 2017
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4.2 Round 2 (2.2)
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4.2 Round 2 (2.3)
c) L03/2016 à Inland
§ License contracts § E&P of 14 inland blocks § 25 companies have been interested, 11 have started pre-‐qualificaGon process
§ Term: 30 years, can be extended for up to 10 more § Bid published on 15 Nov 2016; award expected by 12 July 2017
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4.2 Round 2 (2.3)
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5. Business Opportunities for Oil and Gas Service Companies
There will be more customers/operators, some of with which you are already dealing in other parts of the
world.
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Legal Perspective and Challenges in the Energy
Business Enrique Garza & Amada Bracho
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1. Hydrocarbons Activities (“Regulated Companies”)
§ Surface InspecGon and ExploraGon, and the ExtracGon and ExploraGon of Hydrocarbons;
§ The Treatment, refining, sale, commercializaGon, transportaGon, and storage of Petroleum;
§ The processing, compression, liquefacGon, regasificaGon, and decompression, as well as the TransportaGon, Storage, DistribuGon, and Retail Sale to the Public of Natural Gas;
§ The TransportaGon, Storage, DistribuGon, and Retail Sale to the Public of Liquefied Petroleum Gas;
§ The TransportaGon, Storage, DistribuGon, and Retail Sale to the Public of Petroleum Products, and;
§ Pipeline TransportaGon and Storage connected to pipelines of Petrochemicals.
Hydrocarbons Law-‐Art. 2 31
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2. Labor
§ Labor unions § Social security benefits § Profit sharing § Seamen’s book
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3. Immigration
• Temporary resident card (“TRC”) • Entry visa • Upon the workers or crew arrials, the entry visa must be exchanged for a TRC which is valid for 1 year and mulGple entrances
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4. Fiscal • Establishment of a PE in Mexico • This does not apply to the operaGons of vessels under bareboat or Gme charter
• General Rule: Employees of a foreign company will be subject to Mexican tax if they work in Mexico for over 183 days in a 12 calendar period.
• Companies performing acGviGes by the Hydrocarbons Law the term is reduced to 30 days in a 12 month calendar period.
• Secondment of employees to a Mexican subsidiary or to open a branch of the employment company in Mexico.
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5. Permits
§ ImportaGon of vessels or equipment § NavigaGon permits § Water discharge § Social impact
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EVALUEVALUATIONATION
6. National Content for Regulated Companeis License Contract (35 to 50 years)
EXPLORATION EVALUATION DEVELOPMENT
• 3% in the iniGal period of exploraGon.
• 6% in the addiGonal period of exploraGon
• 8% in the second addiGonal period of
exploraGon
• Verified at the end of each of the periods.
The NaGonal Content is determined from the
exploraGn phase in which the discovery was made.
• 4% from the approval of the Development
Plan up to the beginning of the producGon .
• 10% aqer the beginning of the
producGon
• Verified every 3 years.
4 to 10 years Up to 3 years More than 22 years
SOURCE: CNH * In the event of non compliance a penalty will be applied 36
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EVALUEVALUATIONATION
6. National Content for Regulated Companies Production Sharing Contract (30 to 40 years)
* In the event of non compliance a penalty will be applied
EXPLORATION EVALUATION DEVELOPMENT
15% in the iniGal period of exploraGon
17% in the iniGal period of evaluaGon.
26% for the first year of
development up to the year 2025 when it should reach 35%.
4 to 6 years Up to 2 years More than 22 years
SOURCE: CNH 37
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7. Environmental Permits § ASEA NaGonal Agency for Industrial Safety and Environmental ProtecGon of the Hydrocarbons Sector
§ Permits: Environmental/AdministraGon System § The Regulated Companies and its intermediaries can be held liable for any accidents, harm or damages caused during the performance of its acGviGes.
Source: ASEA Law 38
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8. Environmental Liability
§ Any enGty that causes environmental damages shall be held liable and is obliged to:
– Repair the damage and if not possible – Pay the corresponding compensaGon § In addiGon to the above an economic penalty must be paid (from approx. USD$4,000 to USD$2,400,000). Possibility to be reduced to 1/3 .
§ The statue of limitaGon is 12 years Source: Federal Law of Environmental Responsibilty Arts. 10,13,17, 20 and 29
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9. Insurance Requirements for Regulated Companies
§ Mandatory Insurance Coverage for Regulated Companies : -‐ Civil Liability -‐ Environmental Damage Liability -‐ Well Control, if applicable
• The limits for civil liability and environmental damage are determined either through a Regulatory Minimum insured sum or through a Probable Maximum Loss (PML) study carried out in accordance with ASEA rules.
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Insurance Requirements for Regulated Companies
§ The Regulated Companies are responsible for all damages caused also by their Contractors and the insurance policy does not limit their liability.
Contractors must have insurance to cover their corresponding liability in the event of damages.
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9. Insurance Requirements for Regulated Companies
Source: hJps://www.skuld.com/topics/legal-‐-‐defence/pi/insurance-‐requirements-‐in-‐the-‐mexican-‐oil-‐and-‐gas-‐industry/
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In Mexico always consider:
§ Be as Mexican as you can. § MeeGng and spending Gme with your clients and/your counterpart is fundamental for building up a strong relaGonship.
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Contact Information Enrique Garza
[email protected] +52 55 54248460
Fernando Escamilla [email protected]
+52 55 54248460
Amada Bracho [email protected]
+47 911 644 65 45
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GRACIAS TAKK
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