Salvador Ortiz
Partner
SAI Derecho & Economía
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Full Suite of Legal Economics Services

Wed, 01/18/2017 - 15:22

Q: What is SAI’s approach to its business and who are its clients in the oil and gas segment?

A: SAI is a boutique consulting firm founded more than 20 years ago. Our professionals are mainly lawyers and economists with a strong quantitative approach. One of our first projects was active involvement in the NAFTA trade pact and we continue to provide expertise on free trade issues and economic competition. Most law firms in these fields hire a complimentary economics firm while they focus on the regulatory framework. SAI on the other hand can do both, the economic and legal analysis including competition, pricing and market assessment, therefore delivering a much more comprehensive analysis to the client. Furthermore, our exposure and experience solving issues in a wide variety of industrial and service sectors in Mexico allows us to correlate our studies with the current problems of specific customers.

In the oil and gas industry, SAI’s customers are found mainly in upstream and midstream and around 50 percent are foreign companies. Besides our incorporation services, we want to help companies clarify their view of the legal and economic framework of the country before they set up shop here and most importantly, build possible future scenarios for their business decisions. This way, companies can adapt their strategy to fit with the bidding, contracting and permitting provisions of the Energy Reform. There is a wide variety of consulting topics: other firms need a refined regional market analysis, administration of their contracts, support in their strategic planning or quantitative solutions for specific problems.

Q: In which areas does SAI see opportunity and what are the challenges to seeing those through?

A: For upstream oil and gas, just looking at the official reports it is clear that the largest hydrocarbon reserves and potential resources in the country are located not in deepwater deposits but onshore, such as Chicontepec in the Tampico-Misantla Basin. Companies that want to work onshore face the problem of dealing with legal and social issues related to land management and to the so-called “social license to operate,” areas in which Mexico still faces considerable challenges.

Sometimes a company may reach an agreement with a land owner or an ejido community but the people who live in the region may not be willing to allow the project's development for different reasons. This can become a legal problem that independent medium-sized companies are not ready to deal with and which can cost them time and money. To avoid this setback, we have sociologists that investigate the social environment of the region and identify opinion leaders and the populations' concerns to achieve socially acceptable and inclusive projects. As for midstream, we see logistics, transportation and storage of liquids among the business opportunities in Mexico.

Q: SAI’s legal and economic strategic analyses are relatively new in Mexico. What is their added value?

A: We offer our clients complete transparency from the first day, letting them know what can and cannot be done as well as the risks involved in the projects. Because of our size and the way our teams are composed, combining both young and experienced talent, SAI can offer its customers a fresh and interdisciplinary approach not often found.

Q: How might US President Donald Trump’s agenda impact Mexico’s oil and gas industry?

A: There is uncertainty about what the policies of President Trump related to energy exports will be but there are still plenty of factors to be examined. Our energy supply dependency on the US is substantial, including about half of Mexico’s gas consumption and nearly 50 percent of our gasoline. On the other side of the coin, Mexico is the first customer of US exports of natural gas and gasoline. Shifting the supply to another country of the massive amount of trade between the US and Mexico is difficult, or impossible in the case of natural gas. Our dependency is high but so is the dependency of US companies on the Mexican market.