ASEA’s Transformation from Preparation to Regulation

Mexico’s Agency of Security, Energy and the Environment (ASEA) wants to be a triggering factor for the oil and gas industry and not a restraining agent, Alejandro Carabias, Head of Regulatory Unit of ASEA, told the 2017 Mexico Oil & Gas Summit on Tuesday at the Mexico City Hotel Sheraton María Isabel.

“Our regulatory focus is based on performance targets for safety and environmental protection. This allows us to generate more efficient regulatory models that incentivize participation in the sector,” Carabias said in his presentation on the agency’s transformation from preparation to regulation.

ASEA plays a key role in the implementation of the reform, ensuring its long-term sustainability beyond economic aspects, Carabias said. “CRE and CNH work as the economic regulators. ASEA, which is one of the products of the Energy Reform, works as an environmental regulator, which is necessary to ensure the reforms sustainability regarding social and environmental elements,” he said.

“Our job is to regulate the entire value chain of the hydrocarbon industry. No other regulator in the world has the same capacities in terms of environmental safety as ASEA,” said Carabias. However, the agency’s work goes well beyond regulations. “To achieve our mission, we must be able to help companies generate a culture and capacity for risk management.”

Carabias noted that in only 29 months, the agency is well on its way to achieving its mandate. “We have developed a number of regulations that range from accident investigations, requirements for updating information, norms for refueling stations and maintenance terminals for transportation of liquid hydrocarbons, as well as the revision and updating of existing regulations.”

The technical regulation the agency works on includes the development of official norms, administrative dispositions, agreements and guides to regulate performance in terms of safety and environmental protection, all following best practices and international standards. “If an operator does not have the capacity to work in a complex system such as the one we are establishing in the country, it cannot operate in Mexico. It is not an act of ill will, it is a matter of complying with international standards,” Carabias said.

Carabias acknowledged that the agency’s agenda is quite ambitious and substantial and that the development and the parallel development of regulations has an important degree of complexity, that is why it relies on other players. “We do not set regulations in an arbitrary manner; the industry, academia, research centers and other regulators accompany us constantly.” Carabias also said that the agency relies heavily on independent third parties, which have become similar in some ways to a branch of the agency.

ASEA’s performance has not fallen short of its responsibilitie but Carabias said that it continues to evolve and introduce new ways to operate more efficiently. “We want to implement a digital platform that would allow companies to carry out online procedures, instead of doing them physically. This would also allow us to interact with other regulators.”

However, it is not the only improvement to be made. Carabias said that both the OECD and the International Energy Agency have already provided recommendations to improve ASEA.

Still, Carabias said that the best way for the agency to improve its operations is to transition to a simplified regulatory environment. “ASEA is regulated by a number of laws and regulations that were published in different moments and that have different approaches, which complicates the functioning of the agency, unlike CRE, which is only regulated by two different laws and two regulations.”