New regulatory provisions on national content for upstream activities in Mexico

On January 23, the Ministry of Economy (the Ministry) published new Regulatory Provisions for the Compliance Verification on National Content Obligations of Allocation Holders and Contractors (the Provisions).

Under these Provisions, the Ministry strengthened its authority to verify the veracity of the information provided by Allocation Holders and Contractors and, in general, verify the fulfillment of obligations under the applicable regulations and relevant Exploration and Extraction Contracts or Allocation Titles (Asignaciones).

Pursuant to the Provisions, the Ministry may exercise its compliance authority through three types of verification:

1. The measurement of the reported national content percentage, concepts and the included or excluded amounts
2. Cabinet verification by requiring further documented evidence, and/or
3. Verification visits by authorized personnel of the Ministry at specific time and date

Such Provisions address the possibility of: (i) obtaining information directly from suppliers, authorities or any person who may possess relevant information for cabinet verifications and (ii) on-site verifications of goods, facilities, documents, persons and anything else that may be related to the national content percentage informed by the allocation holder or contractor.

It is also relevant to note, that according to the Provisions, the Ministry shall issue a methodology about the performance of the cabinet verification, noting that it shall be issued within a period that should not exceed 90 calendar days from January 24.

For further information on how these Provisions may apply to upstream projects in Mexico or to make inquiries on how to comply with national content provisions or avoid possible sanctions, please contact César Fernández.