Guidelines regarding the financial mechanisms to ensure the dismantling and abandonment of activities in the Hydrocarbon Sector

On February 25, 2021, the National Agency for Industrial Safety and Environmental Protection of the Hydrocarbon Sector ("ASEA")¹ published the "General administrative provisions that establish the Guidelines regarding the financial mechanisms that the Regulated parties must have in accordance with the provisions of articles 116 and 117 of the Hydrocarbons Law" (the "Guidelines").

The Guidelines consist of nine articles and two transitory articles, by means of which ASEA determines the Financial Mechanisms² that the Regulated Parties³ should have in order to ensure that the activities of dismantling the facilities and abandonment of the land, assets and/or rights that they have occupied, used, enjoyed or affected by virtue of their activities, are carried out: (i) in accordance with the commitments agreed with the owners or landholders, restoring them to the full enjoyment of their rights; and (ii) to cover the damages not foreseen in the consideration agreed with them, which may arise as a consequence of the activities carried out by the Regulated Parties.

In this regard, through the Guidelines, ASEA establishes the obligation for the Regulated parties to contract the Financial Mechanisms within 180 business days after: (i) the date on which the sentence or resolution of the Federal District Judge in Civil matters or the Unitary Agrarian Court becomes effective, by means of which verified the commitments agreed upon for the purposes of occupying the land required for the projects; or (ii) at the commencement determined for the legal hydrocarbon easement.

It is worth mentioning that the Guidelines come into effect on February 26, 2021 and establish a transitory regime of 180 business days for those Regulated parties that do not have such Financial Mechanisms to contract them or achieve the corresponding adjustments.

We remain at your service to comment on the relevant cases in which this obligation applies, as well as the possible legal consequences in case of not timely compliance with said requirements.

Click here to download 'Disposiciones Administrativas que establecen los Lineamientos referentes a los mecanismos financieros para asegurar el desmantelamiento de instalaciones y abandono de terrenos, bienes y/o derechos que hayan ocupado, usado, gozado o afectado por las actividades en el Sector de Hidrocarburos' PDF in Spanish.

_{1 Agencia Nacional de Seguridad Industrial y de Protección al Medio Ambiente del Sector Hidrocarburos.
2 In accordance with articles 3 and 5 of the Guidelines, it is determined as "Financial Mechanisms": the instruments, products, services or processes permitted by Mexican financial regulations that guarantee compliance with the obligations of the Guidelines. Said financial mechanisms, without limitation, could be: (i) insurance; (ii) deposit; (iii) trust; (iv) Letter of Credit or (v) security.
3 Pursuant to Article 2 of the Guidelines, “Regulated parties” are those who carry out the following activities: (i) reconnaissance and surface exploration; (ii) exploration; (iii) extraction; and (iv) transportation by pipelines.}

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_{This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.}

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