As of today, there are 111 E&P contracts and 413 entitlements that allow operators to develop oil and gas activities that generate  geological, geophysical, petrophysical and petrochemical information. All data and rock samples obtained during such activities are  considered of public interest, and as such, they belong to the Nation (not to the entity that produced it on the first place).

Even though the Guidelines for the use and delivery of information to the National Hydrocarbons Information Center (the  Guidelines) establish the obligations for using and delivering said data and physical samples, operators often struggle in its  compliance. In this one-pager we describe some of the obstacles and complexities faced by the industry and propose some general  solutions for minimizing cost and risk of noncompliance.

The challenge

The Guidelines establish the rules for using (obtaining, showing and sharing) the technical information with third parties. They  also describe the rules for its delivery to CNIH. Companies must follow these rules in order to avoid substantial economic and legal  penalties. One of the main problems is identifying the rights and obligations regarding the information, depending on its origin and what you intend to do with it.

Filling of dozens of forms and spreadsheets, operating the Technical Information Organization System (SIOIT), complying with  technical specifications, and short deadlines, are the main causes of multiple preventions and requests of additional information by CNIH, which imposes a high administrative cost not only for the regulator but also for E&P companies.

Proposed methodology

Anyone obtaining data or rock samples, directly or indirectly, shall be aware of obligations entailed by the Guidelines and the best way to do it is considering three lines of action:

1) Delivering information

(a) Map all activities to be developed and their related obligations  contained in the Guidelines  and  other  regulations,  like the  one  for Drilling Permits, and those from Surface Reconnaissance and  Exploration and Exploration Activities (ARES). Knowing the what,  how, when, where and to whom from every obligation is necessary  for optimal planning and compliance. (b) Gathering and preparing  data and rock samples require a full understanding of formats and  forms established in the Guidelines. (c) Run a validation process  with a “public-officer eye” aiming at identifying any gaps in proper  compliance to avoid any request for clarification or requirement  of additional information.

2) Using information

(a) To identify data and rock samples under your custody, how it was obtained (directly or indirectly) and the rights and  obligations related to each one of them. (b) In-depth knowledge from company staff (including G&G and regulatory-  compliance) about the procedures for using information (e.g. sharing, showing, sharing, confidentiality agreements, IT security  conditions, and the like). (c) Be aware of rights and obligations of the information obtained through ARES.

Capability building

(a) Minimizing the risk of noncompliance by developing regulatory expertise across different areas of the company (G&G, legal,  IT, commercial among others). (b) Practice internal and external audits for detecting flaws in processes and capabilities with  a continuous improvement approach. (c) For the mid-term, investing in developing customized methodologies and software  solutions that controls the process from end-to-end.

Conclusion

Handling Mexican Nation’s property has an important downside, so any user of information or rock samples shall be aware of the  related risks. Even though regulations seem complex and confusing, a well-structured approach can help to minimize this risk. For  this to happen, it is important that all operators and users of information invest in developing a good compliance practice for data and rock samples management.