Round One & Shallow Water FieldsWed, 01/21/2015 - 12:45
Representing a wide spectrum of foreign and Mexican clients, ranging from vessel and rig owners and operators to banks, insurance and reinsurance companies, has made Pinedo Abogados a multi- faceted firm with a strong focus on the offshore industry. Having provided legal advice to European, US, and Mexican banks in lending transactions related to the sale and financing of oil rigs and vessels of different types to Mexican companies, José Walterio Pinedo, Founding Partner of Pinedo Abogados, believes his firm has a great competitive advantage in Mexico’s post- Reform offshore ventures. “We have assisted companies in securing financing from US investors for the construction of at least five rigs that are operating for PEMEX. Similarly, Pinedo Abogados has advised Mexican companies when purchasing vessels abroad, providing the right legal structure to capture optimal financing solution for their endeavors. Having handled these types of transactions for several clients in Mexico will enable the firm to continue setting the norm and pushing deals forward in the offshore oil and gas sector,” Pinedo explains. “As representatives of foreign lending banks, we have always aimed to understand the obstacles that an institution of this nature can face in Mexico. Fortunately, Mexican borrowers have performed in accordance with the expectations of the lender in the majority of the transactions that we have carried out. As a result, the financing process has become easier for Mexican companies in general.”
“The first step in creating a financing proposal for a client is assessing how experienced it is in the venture it is looking to take on. After this has been established, the firm reviews the client’s contract with PEMEX in order to carry out a risk assessment by identifying the pros and cons of the contractual terms and analyzing the potential risks that could affect a lender’s decision. Once these factors
are equated, we can structure a financing proposal for our client that takes into consideration every possible detail so that the company seeking financing can successfully capture the lenders’ attention, explained Pinedo. Other important factors must also be considered when securing a contract that involves offshore vessels or infrastructure for PEMEX. Pinedo describes his experience in dealing with liability between lenders, borrowers, and PEMEX. “There is a recurring question from the contractors and lenders regarding the limit of the contractor’s liability in case of a casualty. For instance, in the case of a well blowout or other accident, the extent of liability has always been a grey area that is not well specified by PEMEX in its contracts. We hope that the new contracting framework will have specific provisions dealing with this important aspect.” Paired to this, the firm has been closely involved resolving maritime incidents in the Mexican offshore oil and gas industry. “In our practice, we have handled major casualties in the Gulf of Mexico involving sinking, collisions, oil spills, and stranding of oil rigs and vessels. We understand liability in Mexico and we are looking forward to offering that insight to our clients.”
As the Energy Reform is being implemented, understanding maritime law in the neighboring US Gulf of Mexico becomes critical. Pinedo considers that while there are certainly differences in the legal systems and maritime law in the US and Mexico, the enactment of the Mexican Navigation and Maritime Commerce Law in 2006 has placed Mexico in a favorable legal position. “By incorporating specific provisions dealing with the limitation of liability in offshore incidents, a major step towards the uniformity of laws with other maritime countries has been achieved. When one looks at the cases that have gone to court in recent years to deal with limitation of liability, there is a clear indication that Mexico is headed towards legal alignment with other maritime countries,” he states. Furthermore, he believes the Mexican court system is also evolving as it has been dealing with a significant number of maritime cases of late, thus consolidating its working experience with maritime law issues.
“Transactions in Mexico will most definitely be more complex, but many interesting and exciting opportunities will come our way given that we will be working under new conditions. I am sure that our experience and knowledge of the Mexican legal and business environment will continue to be key factors in assembling these new financing schemes. We are greatly looking forward to becoming completely familiarized with the new legal framework that the Mexican oil and gas industry will have to abide by,” he concludes.