These Midstream Regulations’ main goals are (i) to provide open, nondiscriminatory access to existing transportation and storage infrastructure and (ii) to establish a legal framework that will promote the development of the midstream market. They will apply equally to all new or existing pipeline and storage operators, regardless whether they are State-Owned or private companies, foreign or Mexican. Overall, the Regulations provide the CRE vast authority to regulate the Mexican midstream sector to complete the transition from a state-owned and operated monopoly to a competitive and vibrant market-driven industry. Moreover, Petroleos Mexicanos is required to carry out a complete inventory of all its midstream assets and present market-driven Terms and Conditions for all its Transportation Systems and Storage Facilities within 90-days from the final publication of the Midstream Regulations.
The following summary presents some of the more relevant aspects of the Midstream Regulations including a clear distinction between transportation and storage, different midstream service modalities, cap on Carriers’ Reserved Capacity, open seasons, interconnectivity, expansion/extension, quality banks, guidelines for Carriers to prepare their Terms and Conditions, and their Rates/Tariffs schemes.
Services
Transportation
Scope: Includes (i) reception of petroleum and petrochemicals (P&P) at a designated entry point; (ii) their shipment through the pipelines; (iii) measurement and analysis of the quantity and quality of P&P; and (iv) delivery at a designated exit point.
Components: Transportation Systems may include “buffer facilities” like temporary storage or processing tanks as long as these buffer facilities are directly and exclusively necessary for the transportation of P&P. Buffer facilities cannot be used only for storage purposes and their capacity must reflect the “temporary” requirement.
Carriers:
- Must obtain a Transportation Permit from the CRE. The Permit shall include the Terms and Conditions (“TCPS”) for the Transportation System (similar to the Rules Tariff in the U.S.).
- Must limit their “corporate purpose” to the transportation of hydrocarbons.
- Must provide (i) Firm Commitment Services and (ii) Open Access Services.
- May only transport a limited quantity of their own P&P thorough their Transportation System.
- Must certify the Transportation System’s Capacity, Firm Commitment Capacity, Available Capacity and Open Access Capacity (if any).
Storage:
Scope: Includes (i) reception of P&P at a designated point for storage or depository purposes; (ii) measurement and analysis of the quantity and quality of P&P; (iii) any processing and mixing necessary to meet necessary quality standards; and (iv) delivery at a designated point.
Storage Providers:
- Must obtain a Storage Permit from the CRE. The Permit shall include TCPS for the Storage Facilities (similar to the Rules Tariff in the U.S.).
- Must limit their “corporate purpose” to the storage of hydrocarbons.
- Must provide (i) Firm Commitment Services and (ii) Open Access Services.
- May only store a limited quantity of their own P&P in their Storage Facilities.
- Must certify the Storage Facility’s Capacity, Firm Commitment Capacity, Available Capacity and Open Access Capacity (if any).
Service Formats
Firm Commitment
As a general rule, transportation and storage services of P&P will be offered under a Firm Commitment scheme, whereby Shippers enter into medium to long term fixed volume and frequency agreements with Carriers and Storage Providers (Midstream Companies). The Firm Commitment scheme has priority over the Open Access or Common Use schemes because it allows Shipper to guaranty capacity and access to the Transportation System and Storage Facilities.
Open Access
Midstream Companies must include in their TCPS the necessary conditions to guaranty open access to all the services they provide. Shippers interested in hiring P&P transportation and storage services must send an application to the corresponding Mistream Company, who must provide a formal response within 30 days. Midstream Companies may only deny requested services when there is no Available Capacity or it is determined that the service request is not technically feasible. If the Shipper believes Midstream Companies are not providing open, non-discriminatory access to their Systems/Facilities, they may file a complaint with the CRE.
