Reed Smith Client Alerts

The Mexican Ministry of Economy has published two different resolutions to duly verify the local content reports submitted by permit holders, assignees, and contractors for their local activities in the Mexican hydrocarbons industry.

Authors: Nicolas Borda Armando Cuevas Brun

On January 23, 2020, the Mexican Ministry of Economy (Secretaría de Economía) published in the Mexican Federal Official Daily Gazette (Diario Oficial de la Federación) two resolutions regarding oil and gas exploration and production activities.

  1. Resolution1 setting forth the mandatory provisions for the verification of compliance with local content requirements by assignees and contractors regarding exploration and production activities in Mexico

The Unit of National Content and Promotion of Productive Chains and Investment in the Energy Sector (Unit), through the General Direction of National Content in the Energy Sector of the Ministry of Economy (DGCNSE, per its acronym in Spanish) will be in charge of implementing these rules, directly or with the support of independent third parties and, in essence, will verify the veracity of the local content obligations submitted by the assignees and contractors to the Ministry of Economy through the following means:

A. Verification of the measurement of the percentage of national content reported:

  • The purpose of the verification is for the DGCNSE to corroborate that the information submitted by the assignees and contractors in their local content reports filed with the Ministry of Economy for the past five years is correct, complete, and truthful, and that they have fulfilled their obligations regarding local content, in accordance with the applicable regulations.
  • This verification is focused on the concepts and amounts included or excluded by the assignees and contractors.
  • Information filed for local content that lacks of documentary support will be considered to have a local content equal to zero, and the local content will be deducted accordingly from the value reported by the assignee or contractor.