With the majority of Exploration and Extraction of Hydrocarbons Contracts (E&P Contracts) moving into appraisal and development stages in which there is a change in their projects’ risk profile, it becomes relevant to address some common issues to comply with the requirements in the Mexican regulations for the health, safety and environment risk management systems (SASISOPA, per its initials in Spanish) before the Agency for Safety, Energy and the Environment (ASEA).
SASISOPAs consist of four stages, which are often confused (see right column):
Even E&P Contracts have confused stages 1 and 2. In Rounds 1.1 to 1.4, the National Hydrocarbons Commission (CNH) was accepting the sole registration to comply with clause 4.1. Later, E&P Contracts expressly requested the authorization of the SASISOPA (stage 2), which was impossible to comply with at such an early point in the project. TALANZA successfully engaged in advocacy efforts before ASEA and CNH to protect Operators from incurring in a contractual breach, which resulted in a communication from CNH to Operators stating that the SASISOPA registration would be acceptable instead of its authorization.
Concurrently, more often than not, Operators believe they are in a more advanced stage of their SASISOPA, being in a state of non-compliance out of confusion.
SASISOPA shall always be consistent with the current status of the project. Thus, Operators must update their SASISOPA’s file via a request for modification whenever a project undergoes changes that alter the risk profile of the project, such as moving from exploration to appraisal or development stages or any modifications to its respective plans.
Most of ASEA’s findings during an inspection or supervision procedure can be attributed to a common cause: Operators obtain the authorization of their SASISOPA to comply with the legal requirements and then store the authorized SASISOPA in the drawer and use their own Corporate HSE Risk Management System instead. Why? This happens for several reasons:
Ultimately, these malpractices may lead to a series of negative consequences, ranging from:
Overall, these risks can be avoided with a correct understanding of the SASISOPA’s regulatory requirements per stage. This will allow creating a regulatory compliance strategy that systemically intertwines the Corporate HSE Management System with SASISOPA’s regulatory requirements. An authorized SASISOPA like this, will allow Operators to implement the system they’re experienced in while complying, thus, minimizing not only operational risks but also legal and compliance risks.
1. Registration. During this stage, Operators must register their Corporate HSE Risk Management System to obtain their Sole Regulated Party ID (CURR, for its initials in Spanish). ASEA grants the registration once the Operator demonstrates through the opinion of an authorized third-party, that its Corporate HSE Risk Management System has correspondence with each of the 18 elements established in the ASEA Law.
2. Authorization. Prior to the start of hydrocarbons activities, Operators must have the authorization of SASISOPA, which consists in demonstrating that the registered SASISOPA contemplated in stage 1 will be implemented according to the specific activities of the project. At this stage, a risk analysis of the extended or detailed basic engineering is performed, and the evaluation of environmental aspects and other impacts are contemplated. SASISOPA’s authorization requires an implementation program, that must be completed in no more than two years.
3. Follow up. This stage applies to the entire project’s life-cycle to keep ASEA informed of the progress in the implementation and performance of SASISOPA through the following reports:
María Serna advises on the design of the regulatory compliance strategies where she oversees that each of our suggestions is both legally viable and enforceable as well as representing the minimum government relationships wear. She has experience in advocating before high-level public servants of the energy regulators in favour of our clients often integrating diverse stakeholders’ points of view.
Mr. Contreras is responsible for providing technical and regulatory consulting in Health, Safety, Environment and Social Impact Issues, to our clients, accompanying them during the life cycle of their projects for a successful application of their permits. Mr. Contreras provides an added value to our clients through the implementation of management systems due to his knowledge of the regulatory framework for the entire value chain of the hydrocarbons sector.