Publication
International arbitration report
In this edition, we focused on the Shanghai International Economic and Trade Arbitration Commission’s (SHIAC) new arbitration rules, which take effect January 1, 2024.
Pemex’s comprehensive exploration and production service contracts
Global | Publication | July 2021
The recently launched business plan of Petróleos Mexicanos (Pemex) for 2021-2025 contemplates the increase of oil production by developing Allocation Areas (Áreas de Asignación) through Comprehensive Exploration and Production Service Contracts (CSIEE, in its Spanish acronym).
Service contract schemes are not new to Pemex, since 2008, Pemex has entered into service contracts which have evolved over time. After the COPF (Financed Public Works Contracts) and the CIEP (exploration and production contracts), the CSIEE is the most recent scheme of service contracts.
Through the CSIEE scheme, Pemex holds the entitlement of the Asignación and as such is responsible before the governmental authorities for the compliance with the obligations thereunder, whereas the service provider performs the exploration and extraction activities (including decommissioning and remediation) at its cost, this meaning that the service provider assumes the CapEx and OpEx in exchange for a monetary consideration.
The service provider’s consideration is a percentage of the Available Cash Flow (FED, in its Spanish acronym) which is generally obtained by subtracting from the project income, the taxes and government fees, as well as other irreducible costs such as hydrocarbons conditioning, transportation and labor. Pursuant to Pemex’s business plan, the service provider’s consideration will be guaranteed through a management trust.
According to PEMEX, 35 CSIEE are expected to be awarded between 2021 and 2025, with contractual terms acceptable to banks and investment funds in order to promote and allow investments in these projects.
Today, the Federal Official Gazette published the International Bid for the Cuitláhuac CSIEE, which rules are available on Pemex’s website. For more information on the CSIEE or Pemex’s business plan, please contact:
César Fernández | International Partner
Norton Rose Fulbright US MX, S.C.
Tel +52 55 3000 0604 | Cel +52 1 55 5438 2601
cesar.fernandez@nortonrosefulbright.com
International Partner, Norton Rose Fulbright US MX, S.C.
Email
cesar.fernandez@nortonrosefulbright.com
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