Francisco Méndez
Partner
Mayer Brown
/
Insight

Reform is a Constantly Evolving Work in Progress

Wed, 01/21/2015 - 13:26

Mayer Brown decided to open a subsidiary of its law firm in Mexico in order to provide first class services to the different players entering the country’s energy sector. Francisco Méndez, Partner at Mayer Brown, says the main difference between his firm and others consists of the people working in Mayer Brown’s energy practice: licensed Mexican attorneys with international experience in the oil and gas business. The firm has experience in the downstream, midstream, and upstream segments in the main oil countries in Latin America, such as Brazil, Argentina, Guyana, Colombia, and Peru.

Méndez believes the Mexican bidding rounds should keep on following international standards in order to become more competitive and attractive to international companies. Since each country is different, Méndez says that certain steps need to be taken to re-assess Mexico’s position. He believes Mexico has done a great job in terms of looking at Latin American countries and adopting the best concepts to develop its own Energy Reform. However, PEMEX’s culture, and the way it has been doing business, differs from Ecopetrol in Colombia and Petrobras in Brazil. “Mexico should continue doing what is has done so far, which is carefully analyzing the tactics used in other countries. These must be applicable in Mexico and also help to implement the legislation that was enacted back in August 2014,” states Méndez. “Companies are waiting for these changes to be made, for legislative clarity to be implemented, and for the final details to be interpreted. Without this certainty and clarity, companies will not sign contracts.” Even so, Méndez praises the government for the accomplishments it has reached in such a tight timeframe.

One encouraging matter is that some of Mayer Brown’s clients have already entered the tenders for Round One, and the firm will support them throughout the process. Méndez has been impressed so far with the authorities’ efforts to make data accessible for companies, facilitating their participation in the bidding rounds. “It is great that players can already count on reliable information and study data to base their decisions on whether or not to submit bids. The Mexican government knows that the majority of oil and gas companies are coming to see what the country has to offer. Therefore, it has originated competitive schemes and attractive features to capitalize on this.” He claims that the industry’s feedback has been important in the first drafts of the contracts. “The authorities have reacted in a strong way by amending the contracts, but some elements still provide room for improvement. The issue here is to have a final product that is competitive in the global oil and gas market. After all, if the authorities are not able to do that, the goals of the Energy Reform will not be met.”

Overall, Méndez is confident about the success of the bidding rounds, given the government’s effort and determination. “Mexico has a lot to work on, but the country is strong and has proved that it is capable of honoring its agreements.” Nevertheless, since the opening of an industry on this scale is naturally a work in progress, Méndez believes the sector will have to wait until the results of Round One are tangible before the authorities take the next steps. “I think that the Energy Reform will remain in a state of constant evolution; the industry and the framework will certainly not remain as they are,” he concludes.