CNH's Newly Granted ResponsibilitiesWed, 01/22/2014 - 10:25
Q: How will CNH assess PEMEX’s request for fields and exploration areas in Round Zero?
A: The criteria that CNH will use to assess PEMEX’s request for fields in Round Zero are entirely linked to whether the company has the technical, financial, and execution capacities needed to extract hydrocarbons efficiently and competitively. PEMEX’s development plan will also be subjected to an evaluation process. This is no easy task, as CNH is already reviewing more than 700 producing fields.
As of January 1, 2013, these represented a 2P reserve of 26.17 billion boe. The conclusion of Round Zero will be followed by a contract reviewing process and an analysis to determine if the agreed investment conditions, technology use, delivery times, and expected results were complied with. Therefore, CNH will be involved throughout the entire process.
Q: How can the Energy Reform’s secondary legislation grant CNH the necessary institutional strength?
A: CNH should undergo a deep transformation to achieve the necessary institutional strength to fulfill its tasks, which include taking control of the decision-making processes regarding contracting. The first change that CNH will undergo after the 2013 Energy Reform will be the addition of two new Commissioners. Once the secondary laws are passed, the CNH Law should be modified so that it can adjust to its new duties. The new responsibilities of CNH that relate to geological information will fall under the National Hydrocarbon Information Center (CNIH), as stated in Article 22 of the transitory articles of the Energy Reform. CNIH will be in charge of managing, updating, and maintaining the country’s hydrocarbon related data through a national data repository.
Q: What will be the role of CNH, PEMEX, and the private sector in ensuring that hydrocarbon production increases?
A: SENER, PEMEX, and CNH are responsible for ensuring production increases from today’s average of 2.5 million barrels to 3 million barrels in 2025. The role of CNH is crucial to achieve this objective as it will provide technical support to SENER in determining which fields the national operator will keep during Round Zero. CNH will technically evaluate the fields that PEMEX does not keep to subsequently create different bidding rounds, attracting the private sector’s interest in order to increase national production. CNH will also be in charge of approving exploration and exploitation plans. Therefore, the Commission will assess any partnership in which PEMEX is involved. In order for production to increase, new and large operators must be included in the Mexican industry. PEMEX alone cannot face the need to expand the country’s geological knowledge and take over the exploration segment, enter deepwater, develop shale reserves, and raise production from heavy oil fields. No single oil company in the world could develop that many areas in the oil and gas industry.