Sergio Beristain
Founding Partner
Beristain y Asociados
View from the Top

New Legal Strategies for the Post-Reform Environment

Wed, 01/21/2015 - 13:37

Q: Which trends will define the development of the Mexican oil and gas industry over the coming years?

A: The issues surrounding Round One are beginning to be clarified, and I expect contracts to be successfully awarded. Of course, Mexico is still learning how to design and implement upstream contracting rounds. It will face challenges in this process for which it will have to develop specific solutions. However, a lot of knowledge will be generated in the process, which will allow the country to continuously improve contracting processes during future rounds. Another challenge facing the oil and gas industry stems from the uncertainty resulting from the changing structure of PEMEX, the evolving nature of regulatory institutions such as CNH, and the creation of the new environmental and industrial safety regulator, ASEA. It will take some time for the full impact of these changes to become clear. Nevertheless, Mexico is heading toward a future in which successful oil and gas projects can be developed to deliver sound financial returns for operators, a good environmental performance, and a positive social impact in the areas where such activities will be developed. At the same time, while the Mexican oil and gas industry is leaving PEMEX’s monopoly behind, the productive enterprise of the state will continue to play a central role in the Mexican oil and gas industry. Its full transformation into an efficient, value-creating company may take at least two more years, but it is well on its way. Everyone should now look beyond the current challenges and focus on the future alignment of all these initiatives to create a competitive, efficient, successful energy industry in Mexico.

Q: What are the main concerns of companies that are looking to participate in Round One?

A: Companies would like to know what to expect from the bidding process and the implementation of the contracts. These are the two main areas which, when fully clarified, will allow companies to participate with confidence. For now, though, there are still some parts of these processes that remain unclear. If this situation persists, it could result in misunderstandings and reservations about participating in Round One. Given that Mexico is transforming from a market dominated by a monopoly holder to an open energy market, the country is undergoing many processes for the first time.

Companies have the opportunity to be part of this learning process by participating in Round One, learning how to be successful in such an environment, and understanding how to comply with the legal requirements of the contracting round and of the general oil and gas industry.

Q: What will be the respective roles of foreign and Mexican companies in the Mexican oil and gas industry?

A: The difference between Mexican and foreign companies will cease to exist over time. If we could create the optimal company for operations in the Mexican oil and gas industry, it would combine the experience of Mexican companies on how to do business in the country with the technical capabilities and operational excellence of foreign operators. In the future, any foreign company with experience in Mexico will be able to participate in any round, any type of contract, and any type of field as long as the opportunity is financially attractive.

Q: How will the Energy Reform change the way in which Mexican law firms are positioned in the market?

A: Any Mexican law firm can adapt its approach to offering legal advice and interpreting the law as the legal framework and operating environment continue to evolve. After almost 80 years of a relatively static legal framework, I am very excited to update my knowledge with the new regulations that have come on the heels of the Energy R eform and offer new solutions to our clients. To accelerate this process, we look forward to working in a disciplined way with other Mexican and international law firms to share knowledge on legal best practices. Furthermore, we will take all the findings and solutions resulting from cooperation with our clients, apply them to the new Mexican regulatory framework, and create successful legal strategies. We are very familiar with the old legal framework of the Mexican oil and gas industry, as is illustrated by our client relationships dating back over three decades, and we know how to deliver excellent legal services under this framework. Now, our ambition is to be among the frontrunners in creating new platforms and the right legal solutions for the modern reality of the Mexican energy sector. We aspire to help create a very transparent legal framework that guarantees the long-term competitiveness and success of the Mexican oil and gas industry.