Noe Pascacio
Partner and Head of Energy and Infrastructure
BGBG Abogados
View from the Top

Legal Middlemen for the Retail Sector

Sun, 09/02/2018 - 09:41

Q: Why should downstream companies choose BGBG over any other boutique law firm offering similar services?

A: The team’s core expertise lies in business development strategies in the upstream segment. A few years ago, prior to the Energy Reform, PEMEX released several contract models that were brand new for the industry at that time and we made a point of dissecting and assimilating the key components of these models. This experience is the foundation for our solid set of skills enabling us to understand the new business opportunities and how to implement them. This provides us a competitive advantage within the unlocked opportunities of the Energy Reform in the upstream and downstream sectors compared to other law firms that either do not know the business or lack the experience to implement disruptive changes. Standard law firms assist in complying with the existing regulatory framework, while outstanding law firms provide a clear vision of regulatory changes, such as that resulting from the reform. In downstream, each company or brand has its own strategy and business model, we have the capabilities to engage and interact with this bevy of companies to develop any business model. A year ago, all gas stations in Mexico were owned by PEMEX. Now, brands such as BP, Shell, ExxonMobil, Gulf and Total are making their presence known. Everything is new and CRE is open to discussions to understand our requirements as there is no previous record to use as reference. 
BGBG is used to operating the business with its clients. It is not just a matter of drafting a contract and sending it for a signature but rather, understanding what the contract is for and how it will be managed once it is signed. BGBG has an extensive track record of managing these contracts and understanding the intricacies of IOC businesses.

Q: What insights has BGBG derived from being the middleman between gas station owners and IOCs?
A: IOCs have considerable experience operating gas stations worldwide. BGBG has learned considerably from its prolific interactions with these IOCs, their business model and how they operate. IOCs have a clear picture of the gas station owner profile in Mexico. As it turns out, what is commonly thought of as Mexico’s singularity can be found in other countries, such as Brazil and Peru. Gas station owners have expressed concern over transitioning from decades of interacting with a single, state-owned company to interacting with a myriad of international companies. They must also deal with new authorities and integrate new business models to remain competitive as they shift from a fixed, unique price scheme to variable prices and manage their margins within this variability. BGBG treats every gas station owner as a critical business component for the IOCs so the station owners feel comfortable and reassured that business will flow seamlessly. 
Q: What would you say are the industry’s regulatory priorities and how is BGBG assisting regulators in this issue?

A: The regulatory authorities are doing their best. There is a prevalent practice among regulatory authorities where the priority is to regulate and control every aspect of an industry. When regulators analyze a specific topic or situation, their mindset is always one of control rather than one of improvement or easing business operations. It is natural for a regulator to operate in such a way but we believe there can be a middle point where regulators can integrate pro-business solutions into their regulatory initiatives. In some instances, control and visibility imply extra costs for private individuals and corporations alike. The challenge lies in changing mindsets and how we implement regulatory changes to make it simpler and foster seamless processes.
Q: What milestones has BGBG set for 2018?

 A: BGBG has started advising companies on power generation and energy trading. We would like to deepen our foothold in that particular segment. To that end, we have closed strategic alliances with companies versed in the technical and financial intricacies of the powergeneration business.