Country
Assessment
Following Section 7 of the Petroleum Development Act, 1974 , any violation of the act’s provisions can be sanctioned with imprisonment or fines. Section 29 of the Environmental Quality (Clean Air) Regulation, 2014 , provides for imprisonment or fines for violations of the provisions of the Environmental Quality Act, 1974 . The PPGUA is aligned with the above provisions, in that any noncompliance with their guidelines, including the provisions on flaring and venting, can lead to legal and financial consequences. No evidence could be found in the sources consulted that these provisions have been explicitly applied to flaring- or venting-related contraventions.
Termination clauses are typically covered in the PSCs and risk service contracts, none of which is publicly available. They state that any noncompliance with the MPM requirements (including the PPGUA) can be sanctioned. Section 24 of the Environmental Quality (Clean Air) Regulation, 2014 , gives the director-general of environmental quality the right to issue a prohibition order to discontinue operations, if necessary, to safeguard public health, safety, or welfare. Section 22 allows the director-general to impose additional requirements on operations or take any other appropriate measure deemed necessary.
The Third Schedule of the Environmental Quality (Clean Air) Regulation, 2014 , on limit values and technical standards, covers the midstream and downstream oil and gas sectors but not the upstream sectors.
No evidence regarding fiscal and emission reduction incentives could be found in the sources consulted.
No evidence regarding the use of market-based principles to reduce flaring, venting, or associated emissions could be found in the sources consulted.
Section 1 of the Gas Supply Act, 1993 , regulates gas supply to consumers through pipelines. The processing or refining of petroleum or manufacturing of petrochemical products from petroleum is reserved for Petronas. Any exception requires the prime minister’s approval (Section 6 of the Environmental Quality Act, 1974) . There is no evidence in the sources consulted that any exceptions or privileges for using associated gas have been granted.
Article 14 of the CNH Technical Provisions for the Use of Associated Natural Gas in the Exploration and Production of Hydrocarbons, DOF: 07/01/2016 specifies the methodologies and criteria for operators to structure their associated gas utilization programs and targets. For exploration, the operator indicates the volumes of associated gas that can be utilized given existing technologies, infrastructure, and knowledge of the fields to be explored. The CNH then reviews the associated gas utilization program to establish the targets to be applied throughout the exploration stage. For production, the operator needs to achieve and maintain an annual utilization rate for associated gas of 98 percent. The target must be reached within three years of the start of operations. The operator should detail the actions and investments needed to achieve and maintain the target annually. The CNH reviews the proposed targets and utilization program, and where appropriate, modifies and establishes the final targets to be implemented throughout the production stage. Article 15 permits operators to propose an adjusted gas utilization program to the CNH if field conditions make it uneconomic to reach the authorized targets after the initial three-year period. The CNH will evaluate the application but the original utilization goal cannot be affected.
Article 3 of the Law of the National Hydrocarbon Commission establishes the CNH as the regulator of oil and gas exploration and production. The CNH is under the Secretariat of Energy (Secretaría de Energía [SENER]). The CNH’s responsibilities include regulating the use of associated natural gas and defining technical and operational standards to maximize the recovery and the value of hydrocarbons in the long term while ensuring the minimization of gas flaring and venting. ASEA, which reports to SEMARNAT, oversees the oil and gas sector’s industrial safety, operational safety, and environmental protection.
Article 4 of the CNH Technical Provisions for the Use of Associated Natural Gas in the Exploration and Production of Hydrocarbons states that gas venting is allowed only for safety reasons in emergency cases. Article 6 specifies that the flaring of associated natural gas is allowed during well testing (as long as it is included in the exploration or development plans approved by the CNH), in situations that pose safety threats, and when productive use is not viable (as shown by the technical-economic analysis required in Article 11 and approved by the CNH). Article 21 requires operators to notify the Commission when they have carried out flaring during well tests. The notification should be sent within five days of the test. If emergency gas venting occurs, ASEA must be informed of the volume vented. The volume of gas flared or vented must adhere to the provisions issued by the CNH based on the gas utilization program. The CNH website includes an example of the implementation experience in the Tepetate field.
According to Article 10 of the CNH Technical Provisions for the Use of Associated Natural Gas in the Exploration and Production of Hydrocarbons , the authorization to flare associated gas is included in the exploration or development plan’s approval according to detailed instructions in Articles 14 and 15. When a reservoir is reclassified from nonassociated gas to associated gas, the operator must modify its development plan and add a gas utilization plan. Articles 18–27 of the Regulation of the General Law of Ecological Balance and Environmental Protection in the Field of Prevention and Control of Atmosphere Pollution, 2014, require certain stationary sources—those that emit or may emit odors, gases, solid particles, or liquid particles into the atmosphere—to obtain operating licenses, which SEMARNAT issues by for an indefinite term, and outline the requirements and steps involved in the license application. For the oil and gas sector, the license application is made to ASEA.