On August 3, 2020, the “Agreement whereby the National Hydrocarbons Commission (“CNH”) establishes various measures to promote the development of oil activities” (the “Agreement”) was published in the Official Gazette of the Federation, which had been published by the National Regulatory Improvement Commission on July 17, 2020, to receive comments.
The Agreement arises as a result of the various force majeure or fortuitous-event notifications submitted by different Oil Operators as a consequence of the health contingency caused by COVID-19, the purpose of which has been to request the recognition of that legal figure provided for in the Exploration and Extraction Contracts (“CEE”), as well as the granting of extensions of the Exploration or Evaluation Periods, as applicable to each CEE. Through the Agreement, the existence of a fortuitous event or force majeure is recognized and, consequently, the CNH determined to suspend, during the period from March 23 to July 24, 2020 (the “Suspension Period”): (a) the Exploration and Evaluation Periods, as well as the Development Periods for Extraction that have an associated Minimum Work Program under the hydrocarbon CEEs that are in force; and (b) the Transition Programs that are in force. By virtue of the aforementioned suspension, the obligations of the Contractors during such suspension period shall not be deemed enforceable. On the other hand, such suspension is carried out in accordance with the following: a) The referenced suspension does not imply (i) the modification of the term of the respective CEEs or of any of their other clauses; or (ii) an extension of the periods and program in question; b) With the exception of the obligations linked to compliance with the respective Minimum Work Programs, the Oil Operators must comply with the other obligations incumbent upon them provided for in the CEEs; c) The Oil Operators may continue carrying out the Oil Activities during the suspension period, in accordance with the Plans or Programs approved by the CNH; d) The Oil Operators must submit to the CNH an update of the execution schedule of their Oil Activities within the 20 business days following the conclusion of the suspension; e) In no case may the suspensive nature of the referenced periods, as well as of the Transition Programs, exceed 6 months; and f) At all times, the Oil Operators must keep the Performance Guarantees in force in accordance with the Clauses provided for in the CEEs. Likewise, through the Agreement, the CNH required the Oil Operators to submit the corresponding Performance Guarantees. In this regard, the Performance Guarantees that expire during the Suspension Period must be submitted, by means of a free-form writ, within the 20 business days prior to their expiration. With respect to the Performance Guarantees that do not expire during the Suspension Period, the Oil Operators must submit them with a term of validity that contemplates the suspension of the Exploration, Evaluation, and Development Periods, within 20 (twenty) business days counted from the date on which the suspension period concludes. On the other hand, the Agreement establishes that the CNH will provide technical advice to the Ministry of Energy in order to carry out the suspension established in the Agreement in the extraction activities of PEMEX's assignments. The foregoing, in accordance with the following: a) The term of validity of the Assignment titles, as well as the rest of the terms and conditions established therein, shall remain unchanged; and b) The Assignee may continue the execution of its oil activities, under the terms of the plans or programs approved by the CNH. Finally, the Agreement establishes that the deviations provided for in the regulatory scenarios contained in certain provisions of the “Guidelines regulating the Exploration Plans and Development Plans for the Extraction of Hydrocarbons,” relating to the modification of the Evaluation and Pilot Programs, as well as the Exploration Plans and the Development Plans for Extraction, shall not be taken into account for the triggering of the grounds for modification of such Plans or Programs. Consequently, for those Oil Operators that have an Evaluation or Pilot Program, Exploration Plan, or Development Plan for Extraction approved by this Commission under an Assignment or CEE, the deviations provided for shall not be taken into account for the triggering of the grounds for modification of such Plans or Programs. For additional information, please contact our experts: Alberto Córdoba, Partner: +55 (55) 5258 1016 | acordoba@vwys.com.mx Luis Burgueño, Partner: +52 (55) 5258 1003 | lburgueno@vwys.com.mx Edmond Grieger, Partner: +52 (55) 5258 1048 | egrieger@vwys.com.mx Rebeca Márquez, Associate: +52 (55) 5258 1048 | rmarquez@vwys.com.mx Eugenio Chinchillas, Associate: +52 (55) 5258 1027 | echinchillas@vwys.com.mx
