Manuel Cervantes
Managing Director
MCM Abogados
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View from the Top

Looking to the Past to Excel in the Future

Thu, 08/31/2017 - 12:27

Q: What added value does MCM Abogados bring to the Mexican market?

A: Our integral assistance helps our clients understand both the national and international rules of the market, starting from the bidding processes and structuring their participation to understanding legal risks and analyzing fiscal terms. In general, we provide full support on every legal aspect of running a business in Mexico, particularly given the complexity of the upstream industry. If bidders are successful, we support them in the execution and performance of the contracts. We also have close contact with all the regulatory institutions, such as CNH, ASEA, the Ministry of Economy and the Ministry of Energy. This has allowed us to develop a deep understanding and expertise in the area of farm-ins, farmouts and JVs, making us, most likely, the top law firm in the JV environment.

MCM continuously looks for potential interactions and synergies in the market to not only offer services to its clients but also to establish important relationships with other market players. MCM also excels due to its different and more flexible structure compared to other firms. We like to develop close and long-term relationships with our clients to better accommodate their needs. Having strong technical knowledge is another advantage, allowing us to better understand the needs of our clients compared to our competitors, which tend to have a more generic focus. We are truly specialists.

Q: What factors will make operators successful in the Mexican rounds?

A: In our experience, operators need to perform a thorough evaluation of the contractual area as well as to fully feed the economic model of the project to ensure they have a complete understanding of the auctioned areas. If they successfully manage these two points, they will have a better understanding of what business opportunities are available and make better decisions regarding the licensing rounds.

The Mexican industry is quickly evolving. This can be seen in the licensing rounds, which are improving and becoming more attractive and stable. To understand the market, it is extremely important to not only focus on the last results but also to be knowledgeable of what transpired in previous years with the different players. MCM’s long-term presence in the market is highly relevant in this area. We know the history of the relevant players in the Mexican market, such as PEMEX and CNH, and have a comprehensive record that includes not only the actions of these players but their interpretation of the market that led to the decisions taken.

We always like to be one step ahead. We were involved in the negotiations that created almost every regulatory change over the past years. We can provide our customers with an outlook for the market, helping them make decisions that will benefit them not only with a single bid or contract now, but also in the future.

Q: What key challenge does the local value chain face in an open market?

A: The local value chain is facing many changes and challenges, and it will be hard to work through them. As a result, we will see several companies exit the market. Sooner or later two things may happen: either the government steps in to rescue the companies and try to keep them afloat or it allows them to fail with as little damage as possible. Companies that have developed a proper market analysis will survive, while those that have not and offer business as usual will face difficulties, including a lack of money to comply with business commitments, a reduced ability to acquire financing as well as difficulties dealing with community issues, environmental contingencies or even labor unions. The less companies depend on PEMEX and adopt a vision in which they work for the benefit of the open market, the easier it will be for them to survive. MCM is also in a position to help, not only because of its wide knowledge of the market but because of its close relationships with international operators.