Fernando Zendejas
Chief of the Legal Unit
Ministry of Energy
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Regulatory Agencies Strengthened to Run the Energy Sector

Wed, 01/21/2015 - 09:58

Q: What have been the highlights in the strengthening of regulatory agencies like CNH and CRE, and the creation of entities like ASEA, CENACE, and CENAGAS?

A: CNH and CRE became coordinated regulatory organs on August 11, 2014, due to an act passed by Congress. This means the executive branch of the federal government will exercise its technical and economic regulatory powers in the electricity and hydrocarbons sectors through the aforementioned dependencies. Although they will be closely supervised, these new organs will have technical, operative, and managerial autonomy, as well as their own juridical personality. Furthermore, CNH and CRE will be able to keep revenues from the rights and exploitation activities that they generate. Therefore, they will each possess a fund in which they will deposit the excess revenues they generate for a sum equivalent to up to three times their respective annual budget.

The National Agency of Industrial Security and Protection of the Environment of the Hydrocarbons Sector, also known as ASEA, is a dependency of SEMARNAT, albeit with technical and managerial autonomy. ASEA has the objective of protecting the safety of the people, the environment, and facilities related to or involved in the hydrocarbons sector through industrial and operational safety regulation and supervision. In addition, it regulates the dismantlement and abandonment of facilities, as well as the control of residues and polluting emissions. The development and establishment of this organ was done in conformity with international best practices, by separating the regulator that supervises the recovery rates in the development of hydrocarbon extraction projects, CNH, from the entity that is responsible for industrial safety and the environment, ASEA. Next, the National Center of Control of Energy (CENACE) and the National Center of Control of Natural Gas (CENAGAS) are constituted as decentralized public organisms with their own juridical personality and financial structure. CENACE’s objective is to act as the independent operator of the national electricity system. CENAGAS’s objective is to act as the manager and independent administrator of the natural gas pipelines and storage system. In order to assure the suitable collaboration of all these entities, the Energy Regulatory Coordinated Organs Law established the Energy Sector Coordination Board of Directors to issue recommendations about energy policy, to operate shared information systems and institutional cooperation, and to analyze specific cases that could affect the development of the public energy policies set forth by SENER.

Q: How will the awarding of 60,000 scholarships, as part of the Strategic Program of Human Resources Training in Energy Matters, be implemented?

A: By 2018, the Energy Reform will allow the creation of nearly 500,000 jobs. To support this process, SENER has collaborated with the National Science and Technology Council (CONACYT) and the Ministry of Public Education (SEP) in drafting the Strategic Program for the Formation of Human Resources in the Energy Sector. This wide-spectrum program covers the training of specialized workers, which includes specialists, technical personnel, and professionals.

Q: How will Mexico’s national content requirements evolve over the coming decades, and which methodology will be used to measure compliance?

A: Article 46 of the Hydrocarbons Law establishes that any hydrocarbons exploration and extraction activities that take place within Mexico, through assignments and contracts, must include by 2025 an average of at least 35% national content. In order to achieve this goal, the Ministry of Economy created a unit for national content, charged with the promotion of the supply chain and investment in the Mexican energy sector. To further cement national content requirements, a methodology to measure the fulfilment of these was established in November 2014. This document establishes several plans, as part of the national content requirements. For any contracted assets and services, it must be ensured that enough national and qualified Mexican talent are taking part in projects, that national workforce training projects are in place to help raise the number of available Mexican talent, that local, regional, and national infrastructure investments can proceed, and that transfers of technology help bolster the capabilities of Mexican companies. Just as other oil-producing countries in the world have favored their development by taking advantage of their natural resources, Mexico has to favor local companies and talent to reach a level of economic growth that helps its population.