comisión nacional de hidrocarburos reserves approval ......the 1p reserves were also sanctioned at...

Mexico City, Mexico Sept 27-28, 2012

United Nations Framework Classification for Fossil and Mineral Reserves and Resources

UNFC‐Workshop

Edgar Rangel-GermánUlises Neri Flores

Comisión Nacional de Hidrocarburos

Reserves Approval Guidelines

2

Content

•Legal framework

•General process

•Reserves Approval Guidelines

•CNH’s Resolutions

•2012 Guidelines

•Conclusions

3

Content

•Legal framework

•General process



•2012 Guidelines

•Conclusions

4

Framework

Reserves

Regulatory Framework (Government, Regulatory Bodies)

Company Guidelines

Project‐Based

Resource Framework

PRMS ‐ SEC

EXPLORACION Y PRODUCCION

5

Framework

Reserves


Company Guidelines

Project‐Based

Resource Framework

PRMS ‐ SEC


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Legal Framework

• The final reports by independent certifying parties must be OK’ed by CNH.

• Evaluation reports by PEMEX and quantification must be approved by CNH.

• Based on information from the CNH, SENER will register and publish the country's hydrocarbon reserves.

Reglamento de la Ley Reglamentaria del Artículo 27 Constitucional en el Ramo del Petróleo

(Article 10)

Some of CNH’s attributions:• To participate with SENER in

determining the policy for reserves replacement.

• To perform studies of evaluation, quantification and verification of reserves.

Ley de la CNH(Article 4, II y X)

Ley Orgánica de la Administración Pública Federal

(Article 33, XX)

• The energy ministry (SENER) will register and publish, based on the information of CNH, the reserves, according to the studies, assessment, quantification, and certifications.

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Content

•Legal framework

•General process



•2012 Guidelines

•Conclusions

8

General process

• Estimates and hires certifications of Mexico’s reserves.

Pemex

• OK’s reports of certifying parties

• Approval of Pemex reports

CNH• Registers the reserves values

• Publishes the reserves

SENERSENERPemex

CNH

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Content

•Legal framework

•General process



•2012 Guidelines

•Conclusions

10


Reserves Guidelines

Resources Approval Guidelines

• Obtain Technical elements needed to perform studies of evaluation, quantification and verification.

• Establish Calendar of procedures, steps and requirementsthat Pemex and independent third parties must observe before submitting their reports.

• Assess Consistency between Pemex assessments and independent third parties (less than 10% at the regional level).

• Document Professional profile and independence of third parties.

Reserves Guidelines

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Reserves Guidelines

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Content

•Legal framework

•General process



•2012 Guidelines

•Conclusions

• Approved the reports of assessment and quantification of reserves ofPemex for the 1P, 2P and 3P categories of the Northeastern Marine Region,Southwestern Marine Region and Southern Region.

• Approved the 1P reserves of the Northern Region.

• The differences between Pemex’s figures and the certifying company’sfigures were greater than 10% for the 2P and 3P categories for the NorthernRegion.

• A specific review procedure was established.

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Reserves Resolution 2010

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Specific review procedure

Static Model

Technical

Dynamic Model

Prices

Opex

Capex

Production

Productivity Model Economic Analysis

Economic

$Development

Plan

%10Vol

VolVol

Reserves Pemex´s

Reserves sCertifier´Reserves Pemex´s

x

+

–

NPV




• The Commission concluded that the differences were contingent resourcesin the Chicontepec Asset.

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• The Commission concluded that the differences were contingent resourcesin the Chicontepec Asset.

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The 1P reserves were also sanctioned at Administrative Unit (Asset) level.

• Mexico´s oil reserves as of January 1st 2012, were sanctioned by the CNH.

• For the first time, the 1P reserves were sanctioned at the Administrative Unitlevel. The hydrocarbon volumes were approved for all the Administrative Units.

• Also, for the first time the CNH approved the 2P and 3P reserves of the fouradministrative Regions including Chicontepec (contain several recommendationsissued by CNH and SENER).

• The Administrative Unit Abkatun‐Pol‐Chuc required further analysis, but finallyapproved


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CNH´s ResolutionsResolutions issued by the CNH

Reserves 1P Reserves2P and 3P

Comments

2010Resolution

Reserves for all Region were approved

The Northern Region was not approved

The 2P and 3P of theNorthern Region required further analysis; differences >10%

2011 Resolution

Reserves for all Regions were approved

The Northern Region was not approved

The 2P and 3P of theNorthern Regionrequired furtheranalysis; differences > 10%(contingent resources)

2012 Resolution

Reserves for all Administrative Units (assets) but Abkatun –Pol‐Chuc were approved

All the regions were approved

The Administrative Unit Abkatun‐Pol‐Chuc required further analysis, but finally approved

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Content

•Legal framework

•General process



•2012 Guidelines

•Conclusions

Elements Reviewed

Analyisis

level

Criteria

of the review process

Timeline Reports Others

•Oil•Gas •BOE

• Differences (percentage)

• Region Level• Administrative Unit Level

• Meetings• Documents• Deliverables• Visits

• Formats• Pemex• Certifier

• Contracts• Simpler

processes

Analysis level

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The analysis will focus on the identification and assessment of the differences between the figures provided by the independent third parties and Pemex, for all categories, and these products: oil, gas and crude oil equivalent.

Derived from:• Resolution of the CNH Governing Body.

• Attention to the observations of external auditors for the public sector.

• Consultations with operating companies, certifiers, consultants and regulators.

Analysis

level

•Oil•Gas •BOE

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• The analysis will focus on the identification andassessment of the differences between the figuresprovided by independent third parties and Pemex < 10%(first criterion).

• For 1P reserves, the anaylisis will be at the level ofAdministrative Unit. The analysis level for 2P and 3Preserves will be Region,

• For the following products: oil, gas, crude oil equivalent.

• CNH will consider the impact of the net value of thedifferences between Pemex and the certifier comparedwith regional and national total. (Second criterion).

Criteria of the review process


• Differences (percentage)

• Region Level• Administrative Unit Level

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First Criterion

Second Criterion

Third Criterion

• Analysis of CNH´s Board

10.0Vol

VolVol

Reserves Pemex´s

Reserves sCertifier´Reserves Pemex´s

05.0Vol

VolVol

1P Reserves National Pemex´s

Reserves 1P sCert1fier´Reserves 1P Pemex´s

05.0Vol

VolVol

Reserves 2P National Pemex´s

Reserves 2P sCert1fier´Reserves 2P Pemex´s


A specific review procedure

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Level of Analysis Product Percentage to define the criterion for the

differences

National absoluteshare of the valueof the volume of the differences

Oil ≤10% ≤5%

Administrative Unit 1P

Gas ≤10% ≤5%

BOE ≤10% ≤5%

Oil ≤10% ≤5%

Region 2P and 3P

Gas ≤10% ≤5%

BOE ≤10% ≤5%

Analysis Criteria

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Guidelines comparison

Main characteristics 2010 2012Aggregation level BOE Oil

GasBOE

Level of the ruling Only one criterionAdministrative Unit

>10%Region>10%

Two criteriaFirst > 10%

Second, if the difference impacts > 5% of the national

reserve

Administrative process Complex Simple

Reports of information Pemex only Pemex and Certifier use the same

format

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Guidelines comparison2010

2012

Applying the first criterion

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DIFFERNCES OIL RESERVES GAS RESERVES RESERVES (BOE)

MMbls MMMcf MMbls

1P 2P 3P 1P 2P 3P 1P 2P 3P

Región Marina Noreste < 10 % < 10 % < 10 % < 10 % < 10 % > 10 % < 10 % < 10 % < 10 %

Cantarell Close to 10% < 10 % < 10 %

Ku‐Maloob‐Zaap < 10 % < 10 % < 10 %Región Marina Suroeste < 10 % < 10 % < 10 % < 10 % < 10 % < 10 % < 10 % < 10 % < 10 %

Abkatún‐Pol‐Chuc > 10 % > 10 % > 10 %Litoral de Tabasco < 10 % < 10 % < 10 %

Región Norte < 10 % < 10 % Close to 10% < 10 % < 10 % < 10 % < 10 % < 10 % < 10 %

Aceite Terciario del Golfo < 10 % > 10 % < 10 %

Burgos > 10 % < 10 % < 10 %Poza Rica Altamira < 10 % < 10 % < 10 %Veracruz > 10 % < 10 % < 10 %Región Sur < 10 % < 10 % < 10 % < 10 % < 10 % < 10 % < 10 % < 10 % < 10 %Bellota Jujo < 10 % < 10 % < 10 %Cinco Presidentes < 10 % < 10 % < 10 %Macuspana‐Muspac < 10 % < 10 % < 10 %Samaria Luna < 10 % < 10 % < 10 %

Applying the second criterion: 1P

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National share of the differences Pemex vs Certifiers 1P

Administrative Unit

National share of the differences

OIL RESERVE

GAS RESERVE

RESERVE (BOE)

1P 1P 1PCantarellKu‐Maloob‐ZaapAbkatún‐Pol‐ChucLitoral de TabascoAceite Terciario del GolfoBurgosPoza Rica AltamiraVeracruzBellota JujoCinco PresidentesMacuspana‐MuspacSamaria Luna

All of the differences were less than 5%

Applying the second criterion: 2P and 3P

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National share of the differences among Pemex vs Certifiers 2P and 3P

NATIONAL SHARE OF THE DIFFERENCES

OIL RESERVES GAS RESERVES BOE RESERVES

1P 2P 3P 1P 2P 3P 1P 2P 3P

Northeastern Marine Region

Southwestern Marine Region

Northern Region

Southern Region

All of the differences were less than 5%

Official 1P reserves 2012

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1P Reserves (mmb – pce)

Production

Official 2P and 3P Reserves 2012

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Conclusions• For the first time in the history of Mexico, there’s an independent agency that

reviews the process of Pemex and the certifying companies.

• For the first time in history, Mexico’s reserves numbers are within 10% of thosecalculated by third parties.

• Current guidelines are the result of improvements to the previous guidelines.Collaboration between CNH, Sener and Pemex allowed identification of theelements that needed to be reviewed. These improvements allow us to havehigher (reasonable) certainty in the hydrocarbon reserves.

• The new guidelines contain elements that are clearer and that are fully acceptedby all the entities involved in this process: CNH, Pemex and SENER.

• The new guidelines allow better analyses and avoid unnecessary revisionprocesses.

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Reserves


Company Guidelines

Project‐Based

Resource Framework

PRMS ‐ SEC


UNFC

Conclusions

36

Technical Economic

Static Model Dynamic Model

Prices

Opex

Capex

Production

Productivity ModelEconomic Analysis

$

Development Plan

x

+

–

NPV


Conclusions

37

Thanks!

www.cnh.gob.mx