Simple Solutions for a Complex InteractionMon, 11/13/2017 - 13:22
The Mexican licensing rounds were quickly implemented after the Energy Reform was signed in 2013 with 9 rounds and three farmouts already having taken place as of June 2018. Although the success of the reform has been widely praised, there is more to be done, according to Eduardo Núñez, Managing Partner at Núñez Rodríguez Abogados.
Due to his broad experience in the market and close relationship with national and international companies, Núñez has a deep insight into the main topics that companies struggle with when entering Mexico’s oil and gas industry. “There are three main issues that clients tend to repeat when asking for our services,” he says. “The first is whether the Mexican legal framework offers security for the investments made in the country. The second is related to whether the contractual framework is clear and precise when defining the activities to be developed. And the third is focused on the way companies must interact with Mexican authorities.”
When asked about the best aspect of the Energy Reform, Núñez points to transparency, which has been praised internationally and has been beneficial for the country’s image. “Both national and international investors have pointed out that in Mexico we have created a robust and clear legal framework,” he says. “The fact that the constitutional reform was ratified by Congress through a political consensus is also an important political achievement.”
Despite the robust legislation, the Mexican legal framework for the oil and gas industry was only recently implemented, creating the challenge of how to explain it to the industry, using comparisons with international laws and best practices. “Another challenge of the framework is to keep improving it while keeping it lean,” Núñez continues. “This is tricky due to the many institutions, such as the Ministry of Energy, the Ministry of Finance, CNH, CRE and ASEA, overseeing the legal framework that will regulate one single activity.” Núñez says it is important to have a lean coordination among all these institutions to ensure companies can follow the rules without hurdles, therefore fostering investment in the country.
Núñez Rodríguez Abogados is uniquely positioned to explain international precedent due to its broad understanding of both the Mexican and international markets, Núñez says. “To help companies feel more secure we show them all the laws and international treaties that support their activities in Mexico,” he says. Núñez also emphasizes the importance of having a broad knowledge of the Mexican judicial system, meaning that the firm knows how cases will be approached in almost every situation. “We have been working in the oil and gas business for over 20 years in Mexico and have a full knowledge of the sector,” he says.
Besides its knowledge, the firm can also show clients how to put its legal advice into practice. “For a provider of legal services, it is important to know not only the solution, but how to apply it and the means that will be needed to apply it in an effective way,” Núñez explains. Núñez Rodríguez y Abogados places great importance on the close relationships it creates with its clients, together with follow-up activities to ensure the solutions create a positive impact and value that satisfies its clients.
Núñez emphasizes that it is not always possible to predict risk, especially when it comes to external factors like social, economic and political issues. To help investors prepare for any possible scenario, the firm conducts predictive analyses. Although these scenarios range from positive to negative, Núñez emphasizes Mexico’s interest in providing continuity for the Energy Reform. “We are working hard to achieve a successful Energy Reform in Mexico and send both Mexican and international companies the signal that we are doing things the right way, that we are improving our legal framework and that we are entering a new era of transparency,” he says.
To offer a more impactful support to the Mexican oil and gas industry, Núñez decided to create the Centro de Estudios en Derecho y Gobierno five years ago. The center offers industry-focused executive programs as well as a 100-hour diploma course focused on the legal framework for the industry. “It is the only center in Mexico of this kind, and three generations have already attended it,” he says.