Energy Reform in Mexico:
An Update on CNH’s Role under the
New Framework
Dr. Guillermo C. Dominguez-Vargas
Commissioner
Houston, Texas, January 31st, 2014
www.cnh.gob.mx
guillermo.dominguez@cnh.gob.mx
@DrGCDV
Contents
•
Introduction.
•
The 2013 Energy Reform and CNH.
•
CNH, NPD and ANH comparison.
•
SENER, CNH & PEMEX Roles
•
CNH Challenges.
www.cnh.gob.mx
2
Energy Reform of 2008.
• On November 28th, 2008, was published the last Energy
Reform.
• This Reform established:
1. The creation of the National Hydrocarbons Commission
(CNH)
2. The implementation of the Integrated Contracts for E&P.
3. Appointment of four Professional Advisors for the
PEMEX Board.
• Under this last Reform, PEMEX has done three Bid Rounds
for Integrated Contracts for E&P, including one for six areas
in Chicontepec.
www.cnh.gob.mx
3
Mexico
Oil and gas reserves (3P), 1955-2013*
Billion of boe
70
Methodology
change
60
50
44.5
40
30
20
10
0
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
Source: Dr. GCDV with information from PEMEX Anuario Estadístico 2011 and Memoria de Labores 1965-2011.
*As of january 1st of each year
www.cnh.gob.mx
4
Mexico
Oil and gas reserves*
Billion of boe
3P =44.530
2P =26.174
1P =13.868
Proven
13.868
Probable
12.306
Possible
18.356
Investment. technology,
Personnel and time
Source: PEMEX,
*As of january 1st, 2013
www.cnh.gob.mx
5
Mexico
Oil Production 1960-2013*
3500
Cantarell Project
on nitrogen injection
Thousands of barrels per day Southern Region production
started to decline
3000
Cantarell First Project
2523
2500
Gulf of Campeche
Production begins
2000
1500
1000
Chiapas-Tabasco
Production begins
500
0
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
Source: Dr. GCDV with information from PEMEX Anuario Estadístico and Memoria de Labores 1965-2012.
*2013: Average Jan-Nov
www.cnh.gob.mx
2010
6
6
Mexico
Natural Gas Production*
7
Billion of cubic feet per day
Cantarell
Declining production of light oil from Southern Region and Southwest Marine Region
Veracruz
Southern Region started production decline
Burgos
Project
Discovered of Sabinas’ Basin
Southern Region fields
reactivation
Golfo de Campeche
Started production
6
5
4
3
6.363
Chiapas-Tabasco
started production
2
1
0
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
Source: Dr. GCDV with information from PEMEX Anuario Estadístico and Memoria de Labores 1965-2012.
*2013: Average Jan-Nov
www.cnh.gob.mx
2010
7
Mexico
Imports & Prod. of Natural Gas 1993-2012*
Billion cubic feet per day
9
8
7
6
Imports
Production
5
4
3
2
1
0
*Includes imports of LNG
Source: SIE, SENER (Balance of Natural Gas)
www.cnh.gob.mx
8
Mexico
Gasoline Demand vs. Production 1960-2013 *
Thousands barrels per day
780
800
Domestic Demand
700
600
500
Domestic Production
400
300
200
100
0
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
Source: Dr. GCDV with information from PEMEX Anuario Estadístico and Memoria de Labores 1965-2012. SIE
*2013: Average Jan-Nov
www.cnh.gob.mx
9
Contents
•
Introduction.
•
The 2013 Energy Reform and CNH.
•
CNH, NPD and ANH comparison.
•
SENER, CNH & PEMEX Roles
•
CNH Challenges.
www.cnh.gob.mx
10
The 2013 Energy Reform and CNH
• On December 20th, 2013 the President enacted the
amendments to the Mexican Constitution in order to
allow private national or international companies to
participate in the oil industry.
• The amendments are related to Articles 25, 27 and
28 of the Constitution. It also includes 21 Transitory
articles, where the Mexican Congress outlines the
main aspects planned for the Secondary Regulation.
www.cnh.gob.mx
11
Transitory IV.
Type of Contracts.
Mexico can offer four types of contracts:
a.
Services contracts
b.
Profit Sharing Contracts
c.
Production Sharing Contracts
d.
License Contracts
www.cnh.gob.mx
12
Transitory V.
Booking of Reserves.
Companies that subscribe a contract with Mexico
may report for accounting and financial purposes the
corresponding contract and its expected benefits.
However, it has to be stated that petroleum and all
solid, liquid or gaseous hydrocarbons in the
underground are property of the Nation.
www.cnh.gob.mx
13
Transitory VI.
Round Zero
Within a period of 90 days, PEMEX must submit for
the consideration of the Ministry of Energy the
adjudication, through assignments, of the areas in
exploration and the fields in production that is able to
operate.
For this, it must prove it has the technical, financial
and execution ability to explore and extract
hydrocarbons in an efficient and competitive way.
www.cnh.gob.mx
14
Transitory X.
CNH Functions
The CNH will provide technical advisory to the Ministry of
Energy; responsible to concentrate geological and operative
information; will give the authorization for superficial exploration.
Also, it will be responsible for the bidding processes,
assignment of winners and subscription of contracts for the
activities of exploration and extraction of solid, liquid and
gaseous hydrocarbons.
It will be in charge for technical administration of assignments
and contracts; the supervision of extraction plans that maximize
productivity in the field, and the regulation for exploration and
production.
www.cnh.gob.mx
15
Transitory XII.
CNH Legal Nature
Mexican Congress will adapt the legal framework,
so CNH will become a coordinated energy
regulatory body, with legal personality, and
technical and management autonomy.
It also established the creation of the National
Center of Hydrocarbons Information under CNH.
www.cnh.gob.mx
16
Transitory XIII. Removal and
reappointment of Commissioners
The Commissioners of CNH can only be removed
from their positions for serious causes stipulated for
that effect; they can be newly designated one time for
a second period.
The current Commissioners will complete the periods
for which they were appointed.
To appoint new Commissioners, the President will
submit three candidates for consideration by the
Senate.
www.cnh.gob.mx
17
Contents
•
Introduction.
•
The 2013 Energy Reform and CNH.
•
CNH, NPD and ANP comparison.
•
SENER, CNH & PEMEX Roles
•
CNH Challenges.
www.cnh.gob.mx
18
Comparing Attributions of
ANP, NPD and CNH
Brazil
ANP
Norway
NPD
Mexico
CNH
Technical and Autonomous Body of the Ministry of
Energy for E&P



Establish the National Energy Policy


Assist
To provide technical advisory to the Ministry of
Energy



To concentrate geological and operative information
of the E&P



The authorization of the exploration activities for the
oil industry



The performance of the public bidding process



www.cnh.gob.mx
19
Comparing Attributions of
ANP, NPD and CNH
Brazil
ANP
Norway
NPD
Mexico
CNH
Assignment of winners and subscription of the
contracts of the public bidding process



The technical administration of the assignments and
contracts



The supervision of extraction plans



Establish the Regulation for the E&P



The supervision of HSE



www.cnh.gob.mx
20
Contents
•
Introduction.
•
The 2013 Energy Reform and CNH.
•
CNH, NPD and ANP comparison.
•
SENER, CNH & PEMEX Roles.
•
CNH Challenges.
www.cnh.gob.mx
21
SENER, CNH & PEMEX Roles
The Ministry of Energy (SENER) will establish, direct and
coordinate energy policy, adjudication of assignments to
PEMEX and selection of the areas. The design of contracts and
regulate the bid process.
CNH will be the advisor of SENER, will gather the G&G data,
authorize the exploration, conduct the bidding rounds,
assignment of winners and subscription of contracts; the
technical administration of assignments and contracts and the
supervision of the extraction plans
www.cnh.gob.mx
22
SENER, CNH & PEMEX Roles.
PEMEX shall be converted to State productive enterprise
and is is going to be able to receive assignments and
celebrate contracts.
PEMEX will participate in public bidding processes on the
same terms that all the other companies.
PEMEX can propose to SENER to migrate the
assignments to contracts. In this case CNH will perform a
public bidding process on those cases where PEMEX
decides to have partners.
www.cnh.gob.mx
23
Contents
•
Introduction.
•
The 2013 Energy Reform and CNH.
•
CNH, NPD and ANP comparison.
•
SENER, CNH & PEMEX Roles.
•
CNH Challenges.
www.cnh.gob.mx
24
CNH Challenges.
For the next years CNH will face additional challenges:
1. The development of deepwater fields on the GoM.
2. To increment the Recovery Factor of Mature Fields in
Mexico.
3. The development of Shale Gas Fields.
www.cnh.gob.mx
25
Energy Reform in Mexico:
An Update on CNH’s Role under the
New Framework
Dr. Guillermo C. Dominguez-Vargas
Commissioner
Houston, Texas, January 31st, 2014
www.cnh.gob.mx
guillermo.dominguez@cnh.gob.mx
@DrGCDV