On July 18, 2022, the National Hydrocarbons Commission (“CNH”), published In the Federal Register (“DOF”), “ORDER CNH.03.005/2022, issuing the Technical Guidelines in the Matter of Gathering of Hydrocarbons” (the “Guidelines”).

The Guidelines were approved during the 86th extraordinary session of the CNH dated December 2, 2021, being the first regulation issued specifically regarding oil and gas gathering.

Pursuant to Article 4 Section XXXI of the Hydrocarbons Law (the “LH”), gathering activities are part of the Extraction activities carried out by the regulated parties. Additionally, Article 43, Section I, item d) of the LH establishes the authority of the CNH to regulate the gathering of hydrocarbons, which should be conducted within the purview of an Agreement for Exploration and Extraction or Entitlement over an Allocated Area.

The purpose of the Guidelines is to establish the parameters and procedures to regulate the gathering by the operators. The Guidelines regulate: (i) the technical and economic requirements to carry out the gathering activities; (ii) the development and operation of new infrastructure in which gathering activities are carried out; and (iii) the criteria for Non-Unduly Discriminatory Access to the Gathering Facilities and Services.

Please see below the most important points of the Guidelines:

Development of Pipeline Gathering Systems.

The gathering facilities to be built, installed, and developed shall be included in the plans, programs, investment programs, and budgets approved by the CNH.

The Guidelines also establish the obligation to carry out a market analysis when the following events occur: (i) the construction of a new Pipeline Gathering System inside and outside the Contractual Area or Entitlement; (ii) Expansion or Extension of a Pipeline Gathering System; or (iii) the restoration of a Pipeline Gathering System is carried out. The analysis should be performed prior to the construction, installation, development, or restoration of the facilities takes place.

CNH may exempt the oil operator from performing the market analysis when it submits a technical-economic justification on he reasons why it considers that the Available Capacity to be offered is not feasible for demand by other Users. On the other hand, the CNH will have a maximum term of 20 (twenty) business days to respond, or the approval shall be deemed granted.

The market analysis would resemble an open season for capacity, and involves an obligation to resize, expand and extend the Gathering System if services requests are received and are technically and economically feasible. To this extent, and in all aspects related to the Non-Unduly Discriminatory Access to the Gathering Facilities and Services the Guidelines are similar to the regulation on open access season of transportation systems, but with the difference that only other operators can request access.

Provision of services.

The modalities contemplated by the Guidelines are (i) service under the Contractual Reserve modality and (ii) service under the Common Use modality.

In accordance with the Guidelines, the Contractual Reserve scheme ensures the availability of the service to the User, so it has priority over the Common Use scheme. Furthermore, it cannot be subject to interruptions, reductions, or suspensions, except under events of Force Majeure.

Prior to the rendering of the gathering service, the Oil Operators shall obtain from the CNH the approval of the terms and conditions for the rendering of the service ("TCPS").

The Guidelines also set forth the obligation to provide the gathering service through pipelines to any Applicant or User. For this, they should facilitate and provide Non-Unduly Discriminatory access to use the capacity of their Pipeline Gathering Systems.

The rendering of the service shall be subject to (i) a Service Agreement between the oil operator and the User; (ii) the existence of available capacity in the Pipeline Gathering System or common use service capacity, according to the relevant modality; and (iii) the rendering of the service is technically feasible and economically viable.

Concerning the TCPS, these shall reflect common practices in the rendering of Pipeline Gathering Services, as well as seek efficiency in the rendering of such services.

TCPS.

The Guidelines establish the possibility for the Oil Operators to allocate a percentage of the capacity of their Gathering Systems to move the hydrocarbons they extract based on the corresponding Agreements. Consequently, it will be the operator who will propose to the CNH the percentage to be allocated for the operator's use.

Regarding rates, Oil Operators should charge them based on what is established in the corresponding Agreements for the Exploration and Extraction of Hydrocarbons.

Gathering by means other than pipelines.

The Guidelines establish the possibility that, when the construction of pipelines is not economically viable, the operator may contract the gathering of the hydrocarbons extracted from its Contractual Area or Entitlement through means other than pipelines. However, the operator that intends to carry out the gathering through means other than pipelines shall comply with the regulations in force regarding the Use of Non-Associated Natural Gas.

Additional provisions.

The Guidelines establish the obligation for the operators to foresee in the TCPS the clauses that contemplate bonuses or penalties to be applied in case of service suspensions caused by events other than Force Majeure.