The E&P in Mexico The new approach for the regulatory
framework in E&P through the energy reform
Enrique Silva Pérez General Direction for Regulation and Normativity
January 28th, 2014, New Orleans, LA, U.S.A. 1 www.cnh.gob.mx
http://www.cnh.gob.mx/portal/Default.aspx?id=707http:www.cnh.gob.mx
Contents
• Mexico´s regulatory approach. • Regulatory International comparative analysis
• E&P Regulatory systems.
• Prescriptive model.
• Performance based model.
• CNH´s Regulatory scheme. • Regulatory Risk
• Regulation enacted by CNH.
• Constitutional Energy Reform in Mexico.
www.cnh.gob.mx 2
http:www.cnh.gob.mx
It does not exist an unique regulatory model in hydrocarbon´s E&P sector;
Stardars & best practices of thindustries comes from thoperational experiences of thknow how of the petroleuenterpices;
There is a variety of multilevel regulation in each country; standards & best practices are based upon local & environmental demands
Through the Constitutional Energy Reform, Mexico opened the upstream, midstream and downstream sector to private investments.
Installing a new competitive regime inthe Mexican hydrocarbon sector,competitiveness will be the sources ofa continuous improvement ofoperational standards & best practices.
e e e
m
Regulatory international comparative analysis
In Mexico, the hydrocarbon sector is exclusively federal.
3 www.cnh.gob.mx
http:www.cnh.gob.mx
Contents
• Mexico´s regulatory approach. • Regulatory International comparative analysis
• E&P Regulatory systems.
• Prescriptive model.
• Performance based model.
• CNH´s Regulatory scheme. • Regulatory Risk
• Regulation enacted by CNH.
• Constitutional Energy Reform in Mexico.
www.cnh.gob.mx 4
http:www.cnh.gob.mx
The Energy Reform in Mexico Main E&P challenge for a new oil regime
www.cnh.gob.mx 5
http:www.cnh.gob.mx
The Energy Reform Strategy
The Reform strategy is focused in: • To secure the Country’s Energy Supply & Sovereignty by:
• Opening to private investment in the hydrocarbons upstream, midstream and downstream.
• Allowing all types of hydrocarbon's contracts between Mexican State & National and International oil companies.
• Necessity of complement the efforts of PEMEX by providing more facilities to contracts with 3rd parties, in order to improve:
• Execution Capacity. • Investment capacity and economical risk. • Technical and Technological Transfer.
www.cnh.gob.mx 6
http:www.cnh.gob.mx
The Energy Reform The new regime
• Reforming Articles 25th, 27th & 28th of Constitution in order to grant Production Agreements; Risk Agreements;
• Allowing PEMEX and private investors to have Profit Share Agreements;
• Restructuring PEMEX, absolute legal & corporative government and organization autonomy;
• New Fiscal Regime for better competitiveness and more resources for investment;
• Improve transparency and accountability through the National Hydrocarbons Commission and the Regulatory Energy Commission.
www.cnh.gob.mx 7
http://www.cnh.gob.mx/portal/Default.aspx?id=707http:www.cnh.gob.mx
The Energy Reform The Role of the CNH
• CNH will help SENER defining a Round 0, & the following ones;
• For this new scheme is clear that the CNH needs to enforce its role as a regulatory agency in order of give certainty and transparency to new potential investors in E&P;
• Among the new commitments there may be:
1. Gathering the national G&G data.
2. Granting the exploration and drilling permits.
3. Assesing the technical PDO & PIO plans.
www.cnh.gob.mx 8
http://www.cnh.gob.mx/portal/Default.aspx?id=707http:www.cnh.gob.mx
Thank you!! www.cnh.gob.mx [email protected]
www.cnh.gob.mx 9
http://www.cnh.gob.mx/portal/Default.aspx?id=707http://www.cnh.gob.mx/mailto:[email protected]:www.cnh.gob.mx
Mexico Oil and gas reserves (3P), 1955-2013*
Billion of boe
70
60
50
40
30
20
10
0
Methodology change
44.5
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 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 10
http:www.cnh.gob.mx
Mexico Oil and gas reserves*
Billion of boe
3P =44.530
2P =26.174
Possible 18.356
Proven 13.868
Investment. technology, Personnel and time
1P =13.868
Probable 12.306
Source: PEMEX, *As of January 1st, 2013
11 www.cnh.gob.mx
http:www.cnh.gob.mx
Mexico Oil Production 1960-2013*
Cantarell Project Thousands barrels per day Southern Region production on nitrogen injectio n started to decline
Cantarell First Project
3500
3000
2500
2000
1500
1000
500
0 *As at September, 2013
Gulf of Campeche Production begins
Chiapas-Tabasco Production begins
uSo rce: Dr. GCDV with information from PEMEX Anuario Estadístico and Memoria de Labores 1965-2012.
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010www.cnh.gob.mx
2522
12
http:www.cnh.gob.mx
Mexico Natural Gas Production 1960-2013 *
Billion cubic feet per day Cant arell Declining production of light oil from Southern Region and Southwest Marine Region
Southern Region fields
Chiapas-Tabasco started production
Golfo de Campeche Started production
reactivation
Source: Dr. GCDV with information from PEMEX Anuario Estadístico and Memoria de Labores 1965-2012. *As at September, 2013
6.355Veracruz Southern Region started production decline
Burgos Project
Discovered of Sabinas’ Basin
7
6
5
4
3
2
1
960www.cnh.gob.mx 13 0 1 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
http:www.cnh.gob.mx
n í ri 3 t
Mexico Gasoline Demand vs. Production 1960-2013 *
Thousands barrels per day 780
Domestic Demand
800
700 Domestic Production
600
500
400
300
200
100 Source: Dr. GCDV with informatio from PEMEX Anuario Estad stico and Memo a de Labores 1965-2012. SIE
0 *Production as at September, 201 . Demand as a March, 2013
www.cnh.gob.mx 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 14
http:www.cnh.gob.mx
Offshore Wells Drilled GoM
Su V
es
U
ltra
51
3
67
9
93
5
98
8
80
6
81
0
66
0
68
1
11
21
12
30
73
9
85
1
10
28
16
98
11
96
19
28
61
8
95
7
14
95
17
98
21
54
12
00
28
74
25
35
21
87
29
22
29
18
19
33
17
83
93
5
20
93
77
5
25
72
10
15
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
Wells on drilling Wells to be drilled Producer wells Non commercial producer wells Non producer wells
www.cnh.gob.mx 15
Ch
Na
No
Lak
Lal
Ch
Ta Etb
Ta Cat
Ka
Lee
Ho
l
Lab
Lak
Pik
l
Pu
s
Tali
Ne
Cax
Ku
Hu
Tri
Ku
Ma
Pe
Ah
Pik
l
Lak
Yo
Tri
Laka
ch-2
(20
13)
Dee
pw
ater
d
eep
wat
er
ukt
ah (
200
3)
b-1
(2
00
4)
xal-
1 (
200
6)
ach
-1 (
200
7)
ail (
20
07)
ele
m-1
(2
008
)
mil-
1 (
20
08)
akel
-1 (
20
08)
mh
a-1
(2
008
)
amat
-1 (
200
8)
bili
l-1
(2
00
9)
k-1
(2
00
9)
ok-
1 (
20
09)
ay-1
(2
009
)
ach
-2D
L (2
01
0)
is-1
(20
10)
kon
-1 (
20
11)
pau
-1 (
201
1)
n-1
(2
011
)
a-1
(20
11)
nah
-1 (
20
11)
x-1
(20
11)
pre
mu
s-1
(2
012
)
ón
-1 (
20
12
)
nah
-1D
L (2
01
2)
xim
ino
-1 (
201
2)
p-1
(2
013
)
awb
il-1
(2
01
3)
is-1
DL
(20
13
)
ach
-21
(2
013
)
ka-1
(2
013
)
pa-
1 (
20
13)
ón
-1D
L (2
013
)
RESOLUTIONS / WORKSHOPS * Wells with Workshop
Well Water depth
(mvbmr) Total depth
(mvbmr) Drilling Kick-off
Type of Hydrocarbon Area Resolution
Supremus-1* 2874 4029 2012 Aceite pesado y ligero Perdido CNH.E.07.002/12
Trión-1* 2535 7529 2012 Aceite ligero Perdido CNH.E.07.001/12
Kunah-1DL 2187 4715 2012 Gas Golfo de México B CNH.E.09.001/12
Maximino-1* 2922 6669 2012 Aceite ligero Perdido CNH.10.001/12
Pep-1* 2918 7229 2013 Aceite ligero y super
ligero Perdido CNH.E.13.001/12
Ahawbil-1* 1933 5731 2013 Gas húmedo Golfo de México B CNH.E.14.001/12
Piklis-1DL 1783 4360 2013 Gas húmedo Golfo de México B CNH.03.002/13
Lakach-21* 935 3250 2013 Gas húmedo Lakach CNH.04.001/13
Yoka-1* 2093 4331 2013 Gas – aceite Holok-Han CNH.07.003/13
Vespa-1* 775 3430 2013 Aceite y gas Perdido CNH.08.001/13
Trión-1DL* 2572 4729 2013 Aceite y gas Perdido CNH.08.002/13
Lakach-2 1015 3255 2013 Gas húmedo Lakach
www.cnh.gob.mx 16
http:www.cnh.gob.mx
CNHFigureThe E&P in Mexico. The new approach for the regulatory .framework in E&P through the energy .reform. Enrique Silva Pérez. General Direction for Regulation and Normativity. January 28, 2014, New Orleans, LA, U.S.A. th
www.cnh.gob.mx www.cnh.gob.mx
FigureContents. • • • • Mexico´s regulatory approach.
• • • Regulatory International comparative analysis
• • E&P Regulatory systems.
• • Prescriptive model.
• • Performance based model.
• • CNH´s Regulatory scheme.
• • Regulatory Risk
• • Regulation enacted by CNH.
• • Constitutional Energy Reform in Mexico.
www.cnh.gob.mx www.cnh.gob.mx
FigureRegulatory international comparative analysis Regulatory international comparative analysis FigureIn Mexico, the hydrocarbon. sector is exclusively. federal. federal. www.cnh.gob.mx www.cnh.gob.mx www.cnh.gob.mx
FigureContents. • • • • Mexico´s regulatory approach.
• • • Regulatory International comparative analysis
• • E&P Regulatory systems.
• • Prescriptive model.
• • Performance based model.
• • CNH´s Regulatory scheme.
• • Regulatory Risk
• • Regulation enacted by CNH.
• • Constitutional Energy Reform in Mexico..
www.cnh.gob.mx www.cnh.gob.mx
FigureThe Energy Reform in Mexico Main E&P challenge for a new oil regime .Figurewww.cnh.gob.mx www.cnh.gob.mx
FigureThe Energy Reform. Strategy
The Reform strategy is focused in: The Reform strategy is focused in: •. •. •. •. To secure the Country’s Energy Supply & Sovereignty by:.
•. •. •. Opening to private investment in the hydrocarbons upstream, midstream and downstream.
•. •. Allowing all types of hydrocarbon's contracts between Mexican State & National and International oil companies.
•. •. •. Necessity of complement the efforts of PEMEX by providing more facilities to contracts with 3parties, in order to improve: rd
•. •. •. Execution Capacity.
•. •. Investment capacity and economical risk.
•. •. Technical and Technological Transfer.
www.cnh.gob.mx www.cnh.gob.mx
FigureThe Energy Reform. The new regime •. •. •. Reforming Articles 25, 27& 28of Constitution in order to grant Production Agreements; Risk Agreements; thth th
•. •. Allowing PEMEX and private investors to have Profit Share Agreements;
•. •. Restructuring PEMEX, absolute legal & corporative government and organization autonomy;
•. •. New Fiscal Regime for better competitiveness and more resources for investment;
•. •. Improve transparency and accountability through the National Hydrocarbons Commission and the Regulatory Energy Commission.
www.cnh.gob.mx www.cnh.gob.mx
FigureThe Energy Reform The Role of the CNH. •. •. •. CNH will help SENER defining a Round 0, & the following ones;
•. •. For this new scheme is clear that the CNH needs to enforce its role as a regulatory agency in order of give certainty and transparency to new potential investors in E&P;
•. •. •. Among the new commitments there may be:
1. 1. 1. Gathering the national G&G data.
2. 2. Granting the exploration and drilling permits.
3. 3. Assesing the technical PDO & PIO plans.
www.cnh.gob.mx www.cnh.gob.mx
Figure
Thank you!!. Thank you!!. Thank you!!. www.cnh.gob.mx www.cnh.gob.mx [email protected].
Figurewww.cnh.gob.mx www.cnh.gob.mx
FigureMexico Oil and gas reserves (3P), 1955-2013*. Billion of boe 70 .60 .50 .40 .30 .20 .10 .0 .Methodology change 44.5 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 www.cnh.gob.mx www.cnh.gob.mx
1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 .
FigureMexico Oil and gas reserves*. Billion of boe Billion of boe Billion of boe 3P =44.530 Figure2P =26.174. Possible 18.356 Proven 13.868 Investment. technology, Personnel and time 1P =13.868 Probable 12.306
Source: PEMEX,. *As of January 1, 2013. st
www.cnh.gob.mx www.cnh.gob.mx
FigureMexico Oil Production 1960-2013*. Cantarell Project Cantarell Project Cantarell Project Southern Region production Thousands barrels per day
on nitrogen injectio n started to decline started to decline Cantarell First Project
500 000 2500 2000 500 000 500 0 3311
*As at September, 2013 TableTRGulf of Campeche Production begins
TRChiapas-Tabasco
TRProduction begins
uSouSorce: Dr. GCDV with information from PEMEX Anuario Estadístico and Memoria de Labores 1965-2012.
TRTDFigure
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010www.cnh.gob.mx www.cnh.gob.mx
FigureMexico Natural Gas Production 1960-2013 *. Billion cubic feet per day Cant arell .Declining production of light oil from Southern Region and Southwest Marine Region .6.355Southern Region fields Chiapas-Tabasco started production Golfo de Campeche Started production reactivation Source: Dr. GCDV with information from PEMEX Anuario Estadístico and Memoria de Labores 1965-2012. *As at September, 2013
Veracruz Southern Region started production decline Veracruz Southern Region started production decline Burgos Project Discovered of Sabinas’ Basin
7. 6. 5. 4. 3. 3.
2. SectFigureFigure
1. 1.
960960www.cnh.gob.mx 13. 13.
0. 1 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010. FigureMexico
Gasoline Demand vs. Production 1960-2013 *. Gasoline Demand vs. Production 1960-2013 *. Thousands barrels per day Thousands barrels per day Thousands barrels per day
TR780
TRDomestic Demand
SectFigure
800 700 Domestic Production Domestic Production Domestic Production
600 500 400 300 200 100 100 100
Source: Dr. GCDV with informatioSource: Dr. GCDV with informatio from PEMEX Anuario Estad stico and Memo a de Labores 1965-2012. SIE
0 0 *Production as at September, 201 . Demand as a March, 2013
www.cnh.gob.mx www.cnh.gob.mx
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 Ultra 51367993598880681066068111211230739851102816981196192861895714951798215412002874253521872922291819331783935209377525721015 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 Wells on drilling Wells to be drilled Producer wells Non commercial producer wells Non producer wells www.cnh.gob.mx 15 ChNaNoLakLalChTaEtbTaCatKaLeeHolLabLakPiklPusTaliNeCaxKuHuTriKuMaPeAhPiklLakYoTriLakach-2 (2013) Deepwater deepwater uktah (2003)b-1 (2004)xal-1 (2006)ach-1 (2007)ail (2007)elem-1 (2008)mil-1 (2008)akel-1 (2008)mha-1 (2008Figure
RESOLUTIONS / WORKSHOPS RESOLUTIONS / WORKSHOPS RESOLUTIONS / WORKSHOPS
* Wells with Workshop Well Well Well Water depth (mvbmr) Total depth (mvbmr) Drilling Kick-off Type of Hydrocarbon Area Resolution
Supremus-1* Supremus-1* 2874 4029 2012 Aceite pesado y ligero Perdido CNH.E.07.002/12
Trión-1* Trión-1* 2535 7529 2012 Aceite ligero Perdido CNH.E.07.001/12
Kunah-1DL Kunah-1DL 2187 4715 2012 Gas Golfo de México B CNH.E.09.001/12
Maximino-1* Maximino-1* 2922 6669 2012 Aceite ligero Perdido CNH.10.001/12
Pep-1* Pep-1* 2918 7229 2013 Aceite ligero y super ligero Perdido CNH.E.13.001/12
Ahawbil-1* Ahawbil-1* 1933 5731 2013 Gas húmedo Golfo de México B CNH.E.14.001/12
Piklis-1DL Piklis-1DL 1783 4360 2013 Gas húmedo Golfo de México B CNH.03.002/13
Lakach-21* Lakach-21* 935 3250 2013 Gas húmedo Lakach CNH.04.001/13
Yoka-1* Yoka-1* 2093 4331 2013 Gas – aceite Holok-Han CNH.07.003/13
Vespa-1* Vespa-1* 775 3430 2013 Aceite y gas Perdido CNH.08.001/13
Trión-1DL* Trión-1DL* 2572 4729 2013 Aceite y gas Perdido CNH.08.002/13
Lakach-2 Lakach-2 1015 3255 2013 Gas húmedo Lakach
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