Talanza Energy Consulting

September, 2018

Exploration plans: Essentials of Regulatory Compliance

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19 License Contracts for Exploration and Extraction of Hydrocarbons were awarded in Round 2.4 and  signed on May 7, 2018. Accordingly, the Transition Stage for Startup will come to an end for these  Contracts on November 5th, 2018 in which the Exploration Plan (“EP”) shall be submitted.

Operators have been struggling with the presentation of EP, given that only 3 contracts were authorized  without delays. Since CNH starts counting the 120 days term for approval from the declaration of  sufficiency of information, it seems that 35 business days is an insufficient term for most operators.

EP APPROVAL ROADMAP

With data of CNH’s Contract Administration website, we present the following historical behavior of  submittal and approval of EP.

From our experience, we recommend considering the following essential elements in preparation of  Exploration Plans, to avoid any requirements or delays:

  • Qualitative and quantitative explanation of each exploratory activity, schedule of activities and Minimum  Work Program, for the Initial Exploration Period.
  • Indicative budget, estimated investment amounts to carry out each of the activities and sub-activities of  the EP, broken down by year of execution.
  • Estimation of percentage of national content proposed for the execution of the EP, annual and global, for  the Initial Exploration Period.
  • Program for technological transfer as well as training of national human resources related to the explora-  tion project to be carried out.
  • Operators shall present the work and budget programs corresponding to the first contractual year, to be  evaluated in conjunction with the EP.

R.1.1
All EP were authorized by CNH on time.

R.1.4
Approval took an average of 47 days beyond the normal term.

R.2.1
4 0f 10 EP were approved with 13 days of delay the contractual term and that other 6 are still pending.

R.2.2 & R2.3
8 of 21 contractors presented EP which  would be approved by 4Q-2018

In Talanza, we assist our clients in the  preparation of their Exploration Plans. We  are a multidisciplinary group: engineering,  law, energy regulation, HSE, social, finance  and government. Our competitive  advantage relies on our team’s very own  insight and understanding of the energy  reform in which each of Talanza’s members  has the dual perspective, as an active key  player in the design and implementation of  the reform, and as actual operators of these  regulations, from each of the different  Mexican regulators.

Analysts

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