New PEMEX procurement rules and mandatory compliance requirement for all PEMEX contractors

On May 18, 2018, Petróleos Mexicanos (“PEMEX”) approved and published in Mexico’s Federal Register (Diario Oficial de la Federación) the new “General Procurement Rules and Standards for Pemex and Subsidiaries” (Disposiciones Generales de Contratación para Petróleos Mexicanos y sus Empresas Productivas Subsidiarias) (“New Rules”).

The New Rules replace PEMEX’s previous procurement standards and procedures in their entirety, and are applicable to PEMEX and its subsidiaries. PEMEX’s affiliates, however, are excluded from the scope of application of the New Rules and will be subject to PEMEX’s board resolutions.

Key changes

• A more detailed internal procedure has been provided for PEMEX and its subsidiaries to approve and undertake procurement activities.

• The procurement modalities (Public Bidding Processes, Restricted Invites and Direct Awards) will remain unchanged, and a new modality called “Simplified Transactions” (Operaciones Simplificadas) has been introduced. The main purpose of this modality is to secure the acquisition of goods and services that are necessary to maintain operations in the working centers of PEMEX and its subsidiaries in an expedited manner.

• Although most of the terms and conditions are similar to the ones contained in the prior regime, the scope of the New Rules are clearer and more organized, which will certainly provide a better understanding of and facilitate the procurement process of PEMEX in an expedited fashion.

• Finally, the New Rules contain a chapter on integrity in contracts, the purpose of which is to secure fairness, transparency and integrity in the contracting procedures with PEMEX and its subsidiaries. This particular chapter has been completely overhauled, and now sets forth that service providers, suppliers, contractors, subcontractors and other third parties that are interested in executing contracts, or maintaining existing contracts, with PEMEX or its subsidiaries will be required to have a compliance program applicable to the development of their respective operations, activities or services.
  
  Any third party interested in executing contracts or maintaining existing contracts with PEMEX or its subsidiaries that currently lacks a compliance program must adhere to PEMEX’s Compliance Program with a commitment to implement one of their own.

With the New Rules PEMEX takes a step forward into international practices of compliance and sets a new standard for contractual procedures in the Mexican oil and gas industry. It is expected that other Mexican government agencies will follow PEMEX's lead in compliance efforts.