CRE Plans Extraordinary Inspections of Hydrocarbons Players

CRE plans to present a modification to Agreement A/037/2016, which states the criteria and methodology the regulator must use to conduct inspections. According to this agreement, CRE must review the methodology every five years.

The proposal suggests that CRE’s hydrocarbons unit should choose the entities subject to the verification processes on a yearly basis. According to Oil and Gas Magazine, any of CRE’s areas can request to carry out inspections if it finds irregularities in reports regarding technical, regulatory, economic or financial matters. The inspections can be carried out at the request of any federal or state government area, as well as on the back of citizen complaints, news reports or joint inspection processes with other regulators such as ASEA or PROFECO.

Some of the irregularities that this proposal seeks to address include inconsistencies in volumes of fuels received and delivered, inconsistencies in purchases and sales, discrepancies in statistical reports, issues with permit holder reports and breaches of obligations. To this end, CRE aims to review statistical information, as well as weekly, quarterly and annual reports.

The main differences from the current methodology for inspection lie in the widening of the scope of the criteria to request verification and the verification criteria. 

Industry experts often call for strong regulators with adequate power to regulate the market. Nevertheless, many analysts have pointed toward the government’s tendency to create obstacles for private companies looking to expand their operations in Mexico. This, in turn, is hampering investment opportunities in the country.

“Investors need certainty. They need to know the rules of the game to operate with a certain level of assurance. Energy policy impacts investors’ certainty significantly, and under President Andrés Manuel López Obrador, the decision not to offer new bidding rounds limits the share of the pie for investors. Pairing such finite opportunities with the rising costs of platforms, rigs, steel and other equipment, a range of increased risks, as well as permit and other related delays, weakens the appetite to invest more at this stage. What we need to do is grow the pie,” said John Padilla, Managing Director, IPD Latin America.