No "Perfect" Moment to Enter MexicoWed, 01/18/2017 - 14:44
The Energy Reform is opening up an increasing array of opportunities in the oil and gas sector but those companies that take a wait-and-see stance will be too late to take full advantage, according to ManattJones Global Strategies Mexico.
Juan Casillas, the firm’s Managing Director, and Pedro Niembro, its Senior Director, insist that now is the time to invest in the country. Often, they say, companies wait for the “perfect” moment to enter a market. Their advice is to stop hesitating when it comes to Mexico. “If an energy company faces regulatory blocks or challenges, ManattJones can help them,” Niembro says. “But if you are waiting for the perfect time, you will be too late and will end up watching the whole show from the sidelines,” adds Casillas.
The international consulting subsidiary of US law firm Manatt, Phelps and Phillips LLP is ready to usher international companies as they set up shop and expand their business lines in Mexico. The firm, a leader in providing government relations, nearshoring and business strategy and development services in Mexico, has extensive experience in this area and, as Casillas says, “we are well aware of developments in the Mexican oil and gas industry and maintain close ties with key decision-makers.”
The company boasts some big names, including former Assistant Secretary of Commerce Michael Camuñez, ManattJones’ President and CEO, and former US Ambassador to Mexico, Jim Jones, that give it leverage for aiding new companies entering the country. “Over the past 15 years we have been successfully helping introduce several Fortune 500 and midsized companies into the Mexican market and now we are excited to help them seize the Energy Reform’s opportunities,” Casillas says.
Those opportunities are coming quickly. “The current Mexican administration will be remembered for really pushing for a significant change in the energy sector,” Casillas says, highlighting the far-reaching impact of President Peña Nieto’s 2013 reforms. Niembro adds that although mistakes have been made, the willingness of the Mexican authorities to listen to feedback and adjust accordingly has been commendable.
Both admit that much needs to be done in terms of regulation to assuage the concerns of incoming companies. “There are still some key pieces of information and topics that need to be clarified for all participants to feel comfortable entering the market,” Niembro says, including rules and regulations and the pressing issue of rights of way and social license to operate processes, which need to be smoothed out to help along the industry’s development. “The Ministry of Energy and the judicial system must work on this together to avoid future frivolous injunctions and lawsuits threatening projects.”
The team points to security as a main issue in areas like transportation and project development. “Until now, only PEMEX’s fuel distribution pipelines were affected by security issues but this problem will be of greater concern when the private sector begins to incur losses,” Casillas says. Another area where the consultancy would like to see more work is the collaboration between the country’s academic institutions and the private sector.
Despite the work still required in terms of regulation, the executives praise the current government for changing the Mexican perception of the energy sector, promoting the need for the private sector to participate and recognizing that the new energy scenario will take center stage in Mexico’s next general election in 2018. “If a left-wing party wins, it will influence the Energy Reform’s progress but it will not stop it,” says Casillas.