Storage Permits
Imposition of Requirements
Earlier this year Mexico's Energy Regulatory Commission prepared and circulated some draft amendments to the Natural Gas Regulations governing liquefied natural gas (LNG) regasification terminals (for further information please see "Legislative Update"). As a result of recent political events the energy authorities have decided to defer the publication of these amendments indefinitely.
Consequently, the commission will address some of the issues that would have been covered by the amendments in storage permits, including a five-year grace period for LNG terminals to be subject to open-access obligations. Technical issues are dealt with in the recently published Emergency Mexican Official Standard NOM-EM-001-SECRE-2002, entitled "Safety requirements for the design, construction, operation and maintenance of liquefied natural gas storage plants, which include systems, equipment and facilities for the receipt, conduction, regasification and delivery of such fuel" (the LNG NOM).
Since the LNG amendments will not be published in the forseeable future, the commission will issue storage permits for LNG terminals under the existing Natural Gas Regulations. Commercial issues will be covered in the storage permit, while technical issues will be dealt with in the LNG NOM.
Under the Natural Gas Regulations the commission can impose conditions on the storage permit in order to assure the proper operation of the project. Under this broad discretionary authority the commission has imposed an obligation to hold an open season for capacity reservation in certain transportation pipeline permits.
On August 2 2002 the Ministry of Energy published the LNG NOM in the Federal Register. This regulates all the technical requirements regarding the design, construction, operation and maintenance of LNG regasification terminals.
The LNG NOM is based on other international standards, mainly:
- EN 1160 - Installation and Equipment for Liquefied Natural Gas, which covers the general characteristics of liquefied natural gas;
- BS EN 1473: 1997 - Installation and Equipment for Liquefied Natural Gas, which governs the design of onshore installations; and
- NFPA 59A - Standard for the Production, Storage and Handling of Liquefied Natural Gas (LNG) 2001 Edition.
The minimum standard for storage tanks will be double containment. Full containment will be required only if the risks identified in the corresponding risk analysis support the necessity of having a full containment design.
The LNG NOM will remain in effect for six months from the date of issuance (ie, until February 2 2003). After this the Ministry of Energy shall issue a definitive NOM.
For further information in this topic please contact Rogelio López-Velarde at Lopez Velarde, Heftye, Abogados by telephone (+52 55 50 81 1424) or by fax (+52 55 50 81 1425) or by email ([email protected]).