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LOGISTIC CENTER FOR THE DISTRIBUTION AND TRANSPORTATION OF OIL PRODUCTS

LOGISTIC CENTER FOR THE DISTRIBUTION AND TRANSPORTATION OF OIL PRODUCTS

On January 17, 2019, the President of Mexico, Andrés Manuel López Obrador, passed an executive order whereby he proposed the creation of the “Logistic Center for the Distribution and Transportation of Petroleum Products” (the “Center”), as a decentralized administrative entity separate from the Ministry of Energy, with technical, operational and management autonomy.

The main purpose of the Center would be the establishment, implementation and execution of strategies as well as actions to carry out diverse activities related to the: (i) distribution; (ii) transportation; and (iii) storage of oil products, as well as other related services, in order to ensure and supervise their supply.

Among the most innovative proposals for this center are: (i) implementation and supervision of measuring flow systems, quality and automated controls; (ii) monitoring and supervision of performance in the management and operation of warehouses and inventory controls; (iii) coordination and supervision in the measurement, control and volumetric participation of oil products which are received and delivered; (iv) establishing coordination mechanisms to deal with possible contingencies and emergencies; and (v) supervision the application of strategies, guidelines, policies, standards and programs related to safety systems, occupational health, environmental protection, as well as applicable sustainable development standards.

It is important to mention that although the creation of this center is still being analyzed, should the program be succuessful, its attributions could be duplicated with those already granted to the Coordinated Regulatory Entity in Energy Matters known as the Energy Regulatory Commission (“CRE”).

As of this date CRE is the entity in charge of regulating and supervising activities related to the transportation, storage and distribution of oil products and, therefore, if the referred project is approved, legal uncertainty could be created with respect to which authority is in charge of regulating such matters.

On January 17, 2019, the National Regulatory Improvement Commission (“CONAMER”) issued a positive response to the petition for the exemption of the regulatory improvement resolution requested by the Energy Ministry (“SENER”), therefore CONAMER has granted its approval for SENER to continue with the formalities which are required to publish the project in question in the Federal Official Gazette.

The lawyers of the energy,mining and infrastructure area of our firm are available for any questions orcomments on the above.

SINCERELY

Juan Carlos Serra serra@basham.com.mx
Jorge Eduardo Escobedo jescobedo@basham.com.mx
Jorge Cobos jcobos@basham.com.mx
Jorge Campuzano jcampuzano@basham.com.mx

Mexico City, January 31st, 2019.

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