Carlos Campos Echeverría
Managing Partner
BC Legal Consulting
/
Insight

Fostering Foreign Investment and Strategic Alliances

Tue, 01/22/2013 - 13:21

“Mexico o†ers many advantages for foreign investment; however, it still poses various complications in terms of bureaucracy and corruption,” says Carlos Campos Echeverria, CEO of BC Legal Consulting. “There is also a lack of clear rules that makes it di·cult for companies, both domestic and foreign, to understand their place in the oil and gas industry.” According to Campos Echeverria, national and international private oil companies carry out approximately 90% of Pemex’s activities and of those companies, 80% are foreign. Therefore, he believes there has to be a meaningful focus on assisting the creation of strategic alliances between Pemex and these companies: “Mexico is on the edge of a new energy reform and a new round of ISCs, and we must send a clear message that the country is a great place to do business and that it can be done within the scope of the law.”

Working with Pemex is supposed to be a clear process of following a tender and bidding process, competing for a contract, and negotiating terms, but Campos Echeverria claims that “in reality, you need an extra dose of patience since you negotiate with technicians and engineers, not with businessmen, and their lack of legal aptitude can sometimes damage the bidding process.” Another problem is Pemex’s traditional way of awarding contracts. Although, pursuant to applicable law, quality has to be taken into consideration along with price, the reality is that in many cases Pemex contracts are awarded to the lowest bidder, notwithstanding its quality or reputation. “When Pemex awards contracts based merely on cost, projects often exceed the original budget and sometimes are not even finished. This practice leads to delays and loss of time and money. A certification system, more comprehensive than the actual certification system that only revises the good standing and proper authority of a bidder, needs to be created. As a result, companies will be prequalified by Pemex for specific tasks and industries. If a company enters a bidding process for a contract, Pemex will be certain that the bidder complies with all the quality and technical capability required to fulfill such contract,” he believes.

“Besides Pemex bureaucracy, corruption is crippling the oil and gas industry because international companies are skeptical of working with organizations involved in illegal practices, but this does not mean one cannot do business in Mexico within the scope of the law. I have had many successful cases and negotiations without engaging in corrupt practices,” Campos Echeverria states, “and even though it might be di·cult to avoid them, it is not impossible and they should always be eluded, discouraged, and punished.”

All these challenges are interfering with Mexico’s economic growth and, in order to further foster foreign investment and strategic alliances the government must establish a clear framework for doing business. Companies need to know how they fit in the Mexican oil and gas industry to have a stronger sense of confidence in the country, the oil and gas market, and the opportunities available.

As a means to achieve these objectives, BC Legal Consulting focuses on creating strategic plans where international and domestic companies are advised on the necessary legal, tax, and administrative steps to succeed in Mexico’s oil and gas industry. Their main job is to advise these companies to help them reach their potential in Mexico, and assist them in their negotiations with Pemex. As Campos Echeverria points out, “many of these companies already have lawyers, financial experts, and highly trained engineers. However, they do not know the Mexican market and all its various complications. This is why we focus on o†ering legal engineering, highlevel negotiations between companies and the government, with an unbreakable philosophy of zero tolerance to corruption. Our aim is to foster the progress of Mexico by creating healthy strategic alliances for the benefit of all parties involved.”

Carlos Campos Echeverria strongly believes Pemex is the engine to create a new Mexico: “We have been missing opportunities for decades and there is a feeling in the country that we must have a long-term mentality, understanding this is a process that would boost Mexico socially, economically, and politically.” In his opinion, less complications would not only allow Pemex to keep growing but foster the creation of a stronger, healthier, and more educated citizenry while at the same time attracting foreign investment and bringing more jobs to the country.