At the end of last week there were two events that called the attention of both Mexicans and foreigners in relation to PEMEX: 1) the discovery of 4 new and expense oil fields in the Gulf of Mexico, and 2) the issuance of the General Contracting Provisions for PEMEX and its Subsidiary Productive Companies (the ?General Provisions?).
The first piece of news over the recently discovered oil fields ? which promise to increase significantly the national oil production in the short term? drew the attention of several multinational companies which are planning to invest in Mexico as a consequence of the already well known Energy Reform.
The second report is equally relevant for these companies due to the fact that these General Provisions are the most recent step in the transition of the regulation supplementing the Energy Reform and they continue to delimit the parameters that will regulate their investments in this sector.
We must remember that with the Energy Reform PEMEX is no longer a decentralized public organism and is now an State Productive Company and now, as well as its subsidiaries, is subject to a special legal framework to undertake its contracting activities, being excluded from the Law of Acquisitions and Leases of the Public Sector and the Public Works Law, being ruled by its own laws: the Hydrocarbons Law, PEMEX Law, its corresponding regulations and the recently published General Provisions. A similar separation already existed before the Energy Reform, but now more and more sophisticated departments and legislative instruments are being incorporated, which is integrating a more complete and efficient independence for PEMEX.
In relation to the new General Contracting Provisions it is worth to remark the following:
1. These General Provisions are not applicable to the contracts executed between productive companies; those contracts will be regulated by regular laws.
2. On a yearly basis, before November 15, the program of acquisitions and public works of the following year will be published, defining the objectives and amounts planned for the following year.
3. The following kinds of contest are allowed:
Open Tender: The Call to Tender will be published along its Bases online. They might be national or international (int?l open or under treaty coverage).
Exceptions to Open Tender: Direct Adjudication and Restricted Invitation:
PEMEX will perform a market research to prove that an open tender would require additional costs unnecessarily, and shall issue an exception opinion.
ii. For an exception to apply, one of the circumstances described in Art. 78 of PEMEX Law must exist.
Direct Adjudication: Only in contracts for amounts less than $650,000.00 pesos.
Restricted Invitation: Contracts for amounts less than $3?000,000.00 pesos.
iii. Procurement Department might implement different exception procedures with a proper justification.
4. The contracts might include alternative dispute resolution procedures recognized in international practice, among others: direct consultations, conciliation, negotiation, mediation, dispute resolution boards and arbitration (General Provisions Art. 35).
5. The economic rights derived from the contract may be assigned and the contracts modified with proper justification.
6. The contracts or the tender bases should include conditions for support programs for the community and the environment.
7. In the contracts for integral services of exploration and extraction must be guaranteed that the income will be directed, in first term, to cover its operation expenses.
8. An award of tender might be challenged through a reconsideration motion provided by PEMEX Law and its Organic Statute, or by judicial review before the Federal Tribunal of Tax and Administrative Justice.
9. Contracts Upgrade. Despite PEMEX Law provided that the contracts that had been executed before the issuance of these new provisions would continue to be carried out under the previous legislation, the General Provisions allow for these contracts to be updated and modified to match the current legislation, providing the requirements that should be met in order for this ?upgrade? to be admissible.
10. Integrity and Transparence. It is worth of recognition the inclusion of diverse and comprehensive provisions to safeguard the transparency and integrity of the procurement procedures, including the obligation to suspend any procedure in which errors, acts or omissions jeopardizing the equity, transparence or integrity of the procedure are detected.
