Webinar: "Energy Investment in Mexico: Coping with Change in the Investment Climate"

Live Webinar: "Energy Investment in Mexico: Coping with Change in the Investment Climate"

12:00 p.m. CST (UTC -6) Friday, March 11, 2022

 3:00 p.m. ART  | 6:00 p.m. GMT  |  Timezone Converter

1 hour (inclusive of Q&A)

George Baker, Managing Principal, Baker & Associates, Energy Consultants
Jose Maria Lujambio, Energy Practice Director, Cacheaux, Cavazos & Newton, L.L.P.
Diana Maria Pineda Esteban, Partner, Gonzalez Calvillo
Moderator: Maria Serna, Energy Consultant

Eight years ago, under the government of Enrique Pena Nieto, Mexico amended its constitution to allow foreign participation in the energy sector. These amendments were followed by a number of implementing laws passed in 2014 which clarified and outlined the limits to foreign investment in the upstream, midstream, and downstream sectors of the hydrocarbon and power industry.

Energy companies responded favorably to these energy reforms, and new investments were made in oil and gas exploration, power generation, and power transmission. Hundreds of new and more efficient power plants were constructed, lowering power costs and incentivizing new investments in manufacturing in Mexico. On the oil and gas front, new offshore discoveries were made by Talos Energy, ENI, and Repsol, with more exploration wells planned over the next three years.

In 2018 the Nieto government was replaced by the government of Andres Manuel Lopez Obrador of the Morena Party, who began to roll back the energy reforms promulgated by the previous administration. In April 2021, Congress approved changes to the energy law, allowing regulators the revoke permits for businesses deemed to present “imminent danger to the national security or the national economy”, while the lower house of Congress will vote by May of this year to consider restoring monopoly status to the CFE, the state-owned electric utility. In September 2021 Talos Energy and its two consortium partners received notice from SENER, the energy ministry, that Talos’ deep water Zama discovery in the Gulf of Mexico would be operated by Pemex. The Talos consortium invested an excess of $350MM on the Zama prospect, now deemed a commercial discovery.

These events prompt a number of questions for investors:

  • Despite the optics of these impending changes, do investors anticipate significant impact on the commercial viability of their investments?
  • Are investors seeing regulatory expropriation or only unusual delays?
  • Are there non-legal remedies that operators could deploy to mitigate any potential negative impacts on operations, i.e., investments in social programs deemed to be important to regulators?
  • Are there systemic cultural, institutional, and economic barriers that will limit legislators in Mexico from allowing foreign investment in the energy sector?
  • Are there legal remedies available to investors, should these changes result in significant changes to investment returns? If so, what is the anticipated time frame (and cost) for resolution?
  • Is recourse to the investor-protection mechanisms of USMCA worthwhile?
  • What is the likelihood that the energy reforms will be reinstated? What is the prognosis for the Obrador government?

Our panel discussion will focus on these and other questions and will provide some insight as to the future of foreign investment in the energy sector of Mexico.

Registration Fees:
Member - complimentary
Non-Member - $25

Webinar registration fees include access to the live and on-demand recording on AIPN University.

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Please register at the link to the right. Login details will be provided via email on March 10.