Reimagining the Mexican Constitution: Ideas for 2024
Houston, July 28, 2018—
This report began as a search in the Mexican constitution for anything that would prevent the development of a secondary market in upstream leases, that is, new investors who would bring additional capital, talent and jobs to portions of existing CNH leases. For this, the original leaseholder must be free to negotiate terms and be protected from liability in case something goes wrong.
Such a market is not presently possible in Mexico.
In the United States, such a market is driven by the legal divisibility of a lease by area or depth. Inside Mexico, the contract area in leases issued by the National Hydrocarbon Commission (CNH) are not divisible. The main impediment is a requirement in Art. 27 that the State have “direct dominion” over lands and waters. We urge consideration of unifying the minerals and hydrocarbon regimes based on the figures of concession and farm-out.
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