ASEA issues new guidelines in matters of industrial and operational security and environmental protection for the Hydrocarbon Sector for the closure, decommissioning and abandonment periods

On May 21, 2020, the Mexico’s National Agency for Safety, Energy and Environment (ASEA) published new guidelines in matters of industrial security, operational security and environmental protection for Projects in the Hydrocarbon sector for the closure, decommissioning and abandonment (CDA) periods. The purpose of these guidelines is to establish certain requirements for regulated entities (e.g. E&P Contractors, Pemex, Midstream Companies) that must be fulfilled in the CDA periods of the regulated entities’ Projects (e.g. E&P Contracts, Asignaciones, Midstream projects).

In this regard, regulated entities must follow certain guidelines in order to dully comply with the procedures and obligations during the CDA periods. Among the key guidelines regulated entities must comply with in CDA periods are the following:

General Guidelines

1. Prior to the start of each of the periods (i.e. closure, decommissioning and abandonment periods), regulated entities must update its risk analysis report and mechanism for Systems Administration in accordance with applicable regulation
2. Regulated entities must have a program of activities to be performed during each of the CDA periods (should be based on the recommendations and results of the risk analysis report) which must include a timeline for the activities that will be performed and must be updated prior to the start of an activity
3. Regulated entities must present the CDA program (through a written notice) and the results of the risk analysis report for the activities to be performed for each of the CDA periods to the ASEA no later than 30 days prior to the CDA program’s execution
4. During the performance of CDA period’s activities, Regulated entities must comply with certain requirements, which includes:

• Have the procedures to execute and verify the activities contemplated during the CDA periods
• Have sufficient and adequate materials, equipment and resources in order to comply with the activities in the CDA program
• Have the Terms and Conditions, mitigations measures and/or environmental compensation in matters of environmental impact assessment that were issued for the Project
• Maintain a valid insurance policy for civil liability and responsibility for damages to the environment and, when appropriate, insurance policy for well control, as well as other financial instruments required in accordance with the rules and regulations issued by ASEA
• Comply with the applicable regulation for waste management
• Have an updated emergency response protocol in accordance with the corresponding period and applicable regulation

5. Regulated entities must keep documentation with regards to the activities carried out and the records generated in accordance with the Contract’s administration system for a period of ten years.

Closure Period – Key Guidelines

1. The Regulated entity must start the Closure period in accordance with the CDA program within a year after the Regulated entity presents the notice for the Closure period to ASEA. 
2. The Regulated entity must present to the ASEA a detailed report for the conclusion of the CDA program for the Closure period within thirty days after the conclusion of the activities for such period and which shall be jointly presented with a technical opinion issued by an authorized third party.

Decommissioning Period– Key Guidelines

1. During the decommissioning period, the Regulated entity must execute the necessary activities in order to carry out the total removal of the facilities and structures.
2. The Regulated entity must carry out a comparative evaluation in matters of industrial and operational security and environmental protection in order to determine the best alternative for the reuse, recycling or final disposal of all, or part of the facilities that are part of the project.
3. The Regulated entity must establish procedures to verify that the activities to be carried out during the decommissioning period were done in accordance with CDA program presented to ASEA.
4. The Regulated entity must elaborate a detailed report for the conclusion of the CDA program for the Decommissioning period which must includes a description of the conditions of the site in which the Project’s (project site) activities were performed.

Abandonment Period– Key Guidelines

1. Prior to the start of the abandonment period, regulated entities must carry out an analysis related to the environmental damages derived from the performance of activities for the Project or have an updated result of the environmental baseline study.
   
2. The Regulated entity must establish activities related to the restoration, environmental compensation and remediation, when appropriate, for the project site in accordance with applicable regulation.
3. ASEA must receive a report with a technical evaluation from an authorized third party within eighty business days after the conclusion of the abandonment activities
4. Within thirty days after the Regulated entity receives the technical evaluation from the authorized third party, the Regulated entity must present to ASEA a written notice requesting an abandonment resolution, the technical evaluation, among other supporting documentation.

Please note that this Alert only contains general key guidelines, hence, the details of these guidelines must be analyzed thoroughly.

EY offers its clients relevant information in order for our Client to make informed decisions based on rigorous analysis. At EY we are analyzing the regulatory impact that the fulfillment of these obligations entails, as well as the possible operational implications to assist our clients in the fulfillment of these obligations in an efficient and timely manner.