Mexico’s national hydrocarbons commission (CNH) will suspend the clock on exploration and production (E&P) deadlines under contracts awarded to operators amid the Covid-19 pandemic.
The agreement provides “legal certainty to operators to enable them to continue working efficiently,” CNH general counsel Ramon Massieu told commissioners today.
CNH has received 25 force majeure notifications on oilfield work and 13 requests to extend exploration periods since Covid-19 forced lock-down measures across Mexico.
The agreement applies to all contracts and resolves the force majeure and extension requests without imposing sanctions on operators.
While E&P was classified as essential and allowed to continue during the pandemic, companies have cut capital expenditures and re-programmed work amid operating restrictions including breakdowns in supply chains.
Global crude prices have been volatile since March following a price war between Saudi Arabia and Russia and the crash in demand caused by the spread of Covid-19. While the average price of a representative basket of Mexican export grades has risen to $38/bl, it remains well below last year’s $55.63/bl.
The new rules will take effect once published in the official gazette, after which operators will have 20 days to submit adjusted work programs.
The suspension will run for six month or until the government declares an end to the health emergency announced in March.
CNH does not have the legal faculty to amend E&P periods under acreage assigned to state-owned Pemex, but it will offer technical assistance to the energy ministry in determining how best to modify existing assignments.
Mexico is gradually easing lockdown although the number of Covid-19 infections continues to increase. Some 39,906 deaths of Covid-19 have been recorded in Mexico, although authorities recognize the number could be several multiples higher.
Pemex has reported 204 Covid-19 deaths among employees, thought to be one of the highest death rates among oil companies. Independents have not published data.
Around 80pc of the 100 contracts awarded since 2014 are in the exploration phase, with just 14 in production. Approved investments total $40.4bn so far.
Independent operators had originally pledged to produce 280,000 b/d of crude by 2024 – up from 56,190 b/d in May – while state-owned Pemex had targeted 2.6mn b/d — up from 1.61mn b/d in May — within the same timeframe.
Rebecca Conan. (2020). Mexican regulator stops clock on E&P deadlines. USA. ARGUS. Recuperado de
