On June 2, 2016, Mexico's Ministry of Energy (Secretaría de Energía) published in the Federal Register (Diario Oficial de la Federación) the Guidelines and Template of Contracts for the use, possession, affectation or, if applicable, acquisition of the land, goods or rights for carrying out the exploration and extraction of hydrocarbons and transportation through pipelines (Lineamientos y Modelos de Contratos para el uso, goce, afectación o, en su caso, adquisición de los terrenos, bienes o derechos para realizar las actividades de la exploración y extracción de hidrocarburos y de transporte por medio de ductos).
The purpose of the Guidelines is to establish the minimum contents of the contracts to be agreed for the use, possession, affectation or acquisition of the necessary land, goods or rights of way to carry out the exploration and extraction of hydrocarbons and transportation through pipelines (the "Contracts").
Likewise, the Guidelines provide templates of Contracts which are mandatory for the parties, nevertheless additional clauses may be agreed between the interested parties, provided that these does not infringe or oppose to the minimum content established in the Guidelines; the following templates of Contracts were included; (i) Surface Occupation Contract; (ii) Voluntary Continuous and Apparent Easement Contract; (iii) Lease Contract; and (iv) Purchase Contract.
The following are some of the terms and conditions that shall be included in every Contract:
- Term: it shall not be more than 30 years, it may be extended.
- Access: the developer of the relevant project will be authorized, as well as the personnel it appoints, for accessing permanently to the land during the term of the Contract.
- Consideration: it will be fixed in accordance with the Index that the Institute of Management and Appraisal of National Goods (Instituto de Administración y Avalúos de Bienes Nacionales) will issue for such purposes; the consideration will consist in (a) the rent for the occupation, right-of-way or use of the land; (b) the payments for the harm to goods and rights different than the land, as well as the damages that may arise from the relevant projects; and (c) in the case of projects that achieve commercial production of hydrocarbons, a percentage of the profits of the corresponding Contractor.
The consideration for the extraction, shall be within the range of 0.5% to 3% in case of Non-Associated Natural Gas and within 0.5% to 2% in the other types of hydrocarbons.
It may be paid in (i) money; (ii) through commitments for carrying out development projects in the benefit of the community; or (iii) a combination of the above. In any case whatsoever a part of the hydrocarbons production may be agreed as the consideration.
- Registry: The Contracts shall be registered in the relevant Public Registry of Commerce and Property and if applicable in the National Agrarian Registry (if "ejidos" or communitarian property).
- Judicial Validation: The Contracts shall be submitted for validation before a District Judge in civil matters or to the Agrarian Tribunal (if ejidos or communitarian property) likewise a copy of the same shall be submitted before the Ministry of Urban, Agrarian and Regional Development (Secretaría de Desarrollo Agrario, Territorial y Urbano) , the National Hydrocarbons Commission (Comisión Nacional de Hidrocarburos) and the Energy Regulatory Commission (Comisión Reguladora de Energía), as appropriate.
- Nullity: The Contracts shall be declared null and void if abusive or discriminatory practices of the Contractor are detected or if the land is not used for the purpose of the relevant project, among others.
The Guidelines will enter into force on June 3rd, 2016.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
