Last Friday, the Agency for Safety, Energy and Environment (“ASEA”) released for public consultation a draft of proposed amendments to the General administrative provisions establishing the guidelines for the preparation, implementation and authorization of Industrial Safety, Operational Safety and Environmental Protection Management Systems applicable to hydrocarbons activities (the “Draft”).

In essence, the changes proposed by the Draft will impact: (i) the phases when the Regulated Parties shall obtain the Registration of their HSE Management System (known as “SASISOPA” for its acronym in Spanish), as well as the Authorizations for its implementation in upstream and midstream projects; (ii) reporting obligations to be complied with through the implementation of a SASISOPA; (iii) the administrative procedure to obtain ASEA’s approval to amend a SASISOPA already authorized for implementation; (iv) the administrative procedure to assess the performance of SASISOPAs, and (v) the elements to be included in the implementation plans of SASISOPAs. In addition, the Draft seeks to provide clarity on the provisions related to subcontracted activities.

The Draft proposes, among others, the following amendments and additions to the existing SASISOPA regulations:

1. ARES (Data) Activities. By amending the definition of Project, as well as Article 7, the Reconnaissance and Superficial Exploration activities carried out under an authorization issued by the National Hydrocarbons Commission (“CNH”) are excluded from the scope of application of these Guidelines.
2. Registration and Authorization. By amending Articles 7 and 15, the Draft provides clarity on the stages when the Regulated Parties should have the Registration and Authorization of the SASISOPAs:
   1. for upstream projects, the SASISOPA Registration and Authorization shall be obtained prior to commencing any activity of the construction phase;
   2. for midstream projects, the Draft clarifies that: (a) the SASISOPA Registration shall be obtained prior to commencing any activity of the construction phase; and (b) the SASISOPA Authorization for each project shall be obtained prior to commencing any activity of the operation phase.
3. Reporting Obligations. As of the issuance of the SASISOPA Authorization, Regulated Parties will be required to comply with certain reporting obligations, including but not limited to:
1. biannual compliance reports; and
2. external audits every 2 years.

All other documentation and reports requiring submission, may be consulted in Section B of Annex IV to the Guidelines.

4. Amendments to SASISOPAs. The Draft includes the specific events that will trigger the obligation to report changes to a project. Once the change is reported, ASEA will be able to modify the relevant SASISOPA Authorization. These events vary between upstream and midstream projects, and may be consulted in Articles 22 TER, 24, 26, and 26 TER of the Draft. These include:
1. approval of the Appraisal Program granted by the CNH;
2. approval or changes to plans and programs approved by the CNH;
3. changes or updates to the permits granted by the Energy Regulatory Commission or the Ministry of Energy, when they are the result of technical changes to the project;
4. change of Operations Controller (defined below); and
5. changes to contact information.
5. Performance Assessment. In accordance with Section II of Article 17, the implementation plan of a SASISOPA prepared to apply for and obtain the Authorization shall contemplate a maximum duration of 2 years. Once this term concludes, Regulated Parties will be required to apply for a Performance Assessment Certificate before ASEA on an annual basis, which will certify that the performance of the SASISOPA complies with the provisions of Annex V to the Guidelines.
6. Implementation Programs. The Draft introduces amendments to the documentation that will be submitted by Regulated Parties to ASEA as part of their implementation programs in order to obtain the SASISOPA Authorizations. Key amendments will impact:
   1. risk assessments, which shall be prepared for basic extended engineering or detailed engineering in case of upstream projects, and detailed engineering for midstream projects;
   2. the certified opinions on risks assessments, which shall be issued by qualified entities independent to the Regulated Party and to the entity that prepared the risk assessment, and that will need include an engineering degree and at least five years of experience in the industry; and
   3. best practices and standards of the industry, since Regulated Parties will be required to submit a certified opinion demonstrating that the project complies with the applicable regulations.
7. Subcontracted Activities. The Draft introduces the term “Operations Controller” which is the entity that operates the project by means of an agreement executed with the Regulated Party.

The Draft clarifies that the Operations Controller may implement its own SASISOPA, provided that the Regulated Party prepares and submits a Bridge Document in the relevant SASISOPA Authorization application, demonstrating the compatibility between the Operations Controller’s SASISOPA and that of the Regulated Party.