Electronic Signature Lawfulness for Building Services in Mexico

How to eSign a document: electronic signature lawfulness for Building services in Mexico

welcome to this the first episode of the legal 500s corporate conversation series in-depth looks at pressing legal issues this week energy centralization in mexico uh welcome everyone to this edition of corporate conversations um sponsored by legal 500 i'm honestly a partner at michael sangoya fuentes in mexico city and we have an interesting topic today uh the topic of course the ongoing centralization that has been occurring or going on in mexico's energy industry i'm going to introduce our guest in a few moments but first i'm going to give a brief introduction but before going there i just want to thank illegal 500 for organizing these corporate conversations very interesting format and very flexible format that allows us to introduce gcs across the across several industries and get them to share a little bit of their knowledge and experience well um speaking a little bit about what's going on in mexico's energy sector i would say just as an introduction that the sector is really going through a perfect storm created by both internal and external factors although there are some good news if we speak about the internal factors and well first of all we have to talk about necessarily about 2013 energy reform which was groundbreaking both because of its scale and debt it received worldwide recognition including by international agencies such as the international urgency agency however this new administration the lopez obrador administration through changes not in the laws but actually in the policies and civil regulations they have rebalanced the playing field granting payments and cfe a new role perpetually to regain the energy sovereignty of mexico these changes which include a suspension the indefinite suspension of the oil and gases and gas licensing rounds and electricity auctions have affected private interests and investments in multiple ways the private sector was looking forward to the infrastructural energy announced by the federal government and this plan was expected for the first quarter of 2020 but actually arrived pretty late in the last quarter of 2020 and in two parts the only relevant projects in the first part of this energy and infrastructure plan were refinery projects for pemex the second part of the plant that was that was announced in this last quarter of 2020 included five combined cycle power plants which he would launch through a finance public work structure that's it that's called the obra public financial however we all know that the tender processes for these plans have been put on hold indefinitely for some time now another relevant project also mentioned in this energy for social investment plant is a liquefaction terminal to be built by yenova in baja california there were 297 energy infrastructure plans that were proposed by august by the private sector organizations especially conservo coordinator but these were left out this would include 66 solar projects 49 wind farms 18 service stations and 31 storage stations on the on the other hand what we've been seeing is that 10x credit rating continues to deteriorate and it has been reduced from stable to negative in the past few months temex's proposed investment for the next years would not be sufficient to maintain the level of production in 2019 and 2020 considering a cut in temex's investment budget of approximately 1.6 billion dollars which forces pemex to focus only on high margin projects high margin projects now we add to these the external product factors uh it turns out that as a result of the kobe 19 pandemic there has been substantial volatility in the prices of oil and it is expected that global demand for oil collapse will collapse to an all-time low of 9.3 million barrels per day in 2020. in response to this volatility in the price of oil the opec plus group has curtailed oil production or oil supply by 10 million barrels per day and the oil prices of course has impacted mexican oil production which has hold since march at prices below 40 dollars per barrel reaching an all-time low which i would say was impressive never heard of of minus two dollars per barrel on april 20. imf the international monetary funds forecast for the mexican economy is that it will have a a reduction a decrease of six point six percent and some some analysts believe this is actually optimistic in 2020 and the international monetary fund expects that mexico's gross domestic product will grow by no more than 1.8 percent in 2021. well that's all the bad news from both internal and external factors however there are there are some good news in the horizon first of all well the good news for instance if we take a look at the hydrocarbon side of the sector is that the country you know although the new lopez oral administration has changed its policies and some regulations and suspended oil and gas licensing rounds the contracts were prior by that were granted by prior administration have been ordered and the first oil has been extracted from some of from some from from some of the oil fields uh granted to the prior to private companies mainly in shallow waters production is expected soon and will allow mexico to increase its energy platform on the other hand the infrastructure and services that are required for oil fields for these oil flows granted to private companies to comply with over 60 exploration plans and 30 development programs both insurance officers represent billions of dollars of currency investments by pemex iocs and independent operators from close to 40 countries more than 70 storage terminals with an aggregate capacity of 4.5 million dollar barrels and with a required investment exceeding 5 billion dollars have already been authorized and are in the works on the other hand although create the energy regulatory commission has been slowing down permits the fact is that private sector participation in retail is a reality with more than one third of the market now with private in the hands of private sector brands on the other hand the the new free trade agreement with the u.s usmca became effective on july 1st 2020. this private this new trade agreement protects investments in the hydrocarbons and electricity sectors bought against discriminatory treatment and direct and and also direct under indirect investments on the other hand on april 2020 the free trade agreement between mexico and the european union was updated and now includes areas such as energy and sustainable development and having given this introduction as you can see there there is a perfect storm out there uh created both by internal factors within mexico but also external factors in the world but but there is a positive outlook in this sector and in some aspects to talk about the this lab this landscape in mexico especially the upstream sector we have invited hector hoffman who is the highly more turned mexican commercial legal council her elector has worked for public and private companies with the industry leading to a deep understanding of technical legal and practical matters regarding oil and gas products in mexico and central america hector welcome thank you for joining us thank you rashford for inviting me today to discuss about this important matter first i want to thank we had his law firm and 500 to having arranged this discussion well it is our pleasure and it's great having us here good morning well companies such as halliburton have worked with paymex for over 70 years do you consider that the energy report reform as an opportunity or it affect the way service contractors have been doing business in mexico uh well uh i believe that's the that's an opportunity in many sense as the market uh opened we have more players in the field we are not allowed to provide services to many many other customers and or players within the industry which is a good thing in my opinion however this also allowed to local service contractors to take in a share of the market in mexico uh having more competition made the stream more effective because all these local companies would are involved now with international companies uh implementing the best the best practices in the in the industry uh in my in in terms of hsc matters so i think it's a it's a good thing uh also we can we cannot ignore the relevance of pamex we respect the mexican market of course is our main major client in mexico as you mentioned uh halliburton has a long story in working with pemex and we consider ourselves uh the company as a strategic partner of pemex to provide a variety of services and technology that allow to maximize the value of payments assets uh in benefit of mexico of course so having the straight uh of mx implemented by it's a good idea by these new governments as companies like haliburton and local service contractors also be benefit of increasing the activity of payments thank you that those are interesting insights um however ektor it is no secret that the energy policy the new energy policy being uh implemented by lopez or administration it's aimed at giving pemex and cfa a new role perpetrated to regain mexico's energy sovereignty do you believe these policies are affecting the oil and gas industry and if so how are they being affected well i think the energy from brought many opportunities for all the players in the uh in the field including including pemex of course um let's remember that temex is the major oil operator in mexico with contracts with cnh uh it's also important to to mention that makes its benefit of course of this new energy reform from a service contractors perspective the new policies are not considered than perfect i do not consider that are the perfect storm scenes they are showing have benefit to payments payments and all operators with a with a contact with cmh are still working ing with their exploration and production plans so we are still able to work with with both of them so we're expecting that these contracts are honored by the mexican government so we can continue working with our customers as we are doing right now well but in my opinion all service companies from the largest to the smallest seek to see a vigorous and growing upstream sector either through iocs and independent operators that have signed contacts with cnh or by strength of 10x capabilities either scenario has it offsites and downsized but it's definitely well accepted within the industry that the benefits of whatever outcome shall be reflected in an increase of all production and social economic economic improvement for mexico okay thank you well um as gc of haliburton in mexico hector of course you have a lot of experiences what's going on especially in the austrian sector can you tell us what challenges you know general counsel such as yourself are facing with the new policies that the mexican administration is implementing in the options sector of course well uh i think that the energy reform creates well creates certainly a new legal framework straight the cnh capabilities and also create new agencies such as the asea for the hsc matters and and industrial safety or the mexican petroleum fund which manage all the income from the contracts signed with cnh challenging ourselves in-house lawyers and law firms to rapidly learn of these new regulations as well as to interact with real electors in a new hue in a new whole new market conditions in which paymex is not the main factor of all of the decisions at least in the mexico in the hydrocarbon industry more specifically in the upstream sector uh but even payments have to learn to deal with these new rules and adapt itself to retain the the permanent role as noc in the in the national oil and gas market so mexico is competing uh sorry pemex is competing so i think it's a it's a good thing so so since the regulated regulatory framework continues to changing as you mentioned at the beginning of this conversation uh i believe that the changes the challenges isn't to be updated in an environment that continues changing although it's important to note that kobit 19 pandemic and drop of the oil prices as mentioned before have also wrapped that the industry in many ways reshaped the industry in many ways uh bringing new challenges today most of us uh we are working remotely and many our organizations have taken and a step back to revaluate their way they are doing business and eliminate waste and do more with less okay well thank you hector let's take a quick 19 pandemic out of the question let's say that vaccinations work they're being applied to everyone and the world returns to normal what are your expectations for for for the following years especially considering the new policies being implemented by the mexican government uh well i think we can expect iocs and independent operators to continue fulfilling their exploration and production plans contributing to the mexico production production goals since as you mentioned in the introduction significant investment were made to date and this day this is the only is this and this is only the beginning of of this process uh on the other hand i see a pemex strong and committed to maximize the resources that that available in the benefit of increase of hydrocarbon production so that that means that for service companies the the landscape of the industry it's good it's a good news having pemex trade as i mentioned before mx is one of the largest customers for haliburton uh we have been working with them many many years so i believe that all of us within the industry should ask of ourselves to [Music] how these two models can to exist for the benefit of the growth of mexico it seems that to me that it's a matter of find how they can compete each other in a win-win situation for both and uh private uh sector and and pemex of course so so thank you very much um it seems to me you know my take away from from this conversation is that um you know there are significant external factors that are um that are affecting the industry but also the policy of mexico's government is also changed changing the playing field and what i'm hearing from you is that the way the way you see it as general counsel of haliburton and based on your experience is that it's better to have competition it's good to have a strong mix and a strong at the mix which is profitable which is a great worthy which is an excellent partner and client of haliburton but it's also good to have iocs and international operators out there doing well competing uh producing oil and gas in in mexican oil fields create you know producing taxes paying taxes to the mexican government and it seems to me that although the mexican government strategy right now is focused on strengthening pemex it's also also good to maintain diversity and it's it's good for it's good for every player in the market including including pemex am i right in the in that conclusion is is that more or less the wages things sector yeah yeah i think i think it's it's accurate what you're saying right now from uh summarizing all of what all this discussion we have today uh and uh i believe that the mexican government it's it's it's keen to get um the oil field operators currently working in mexico [Music] going going well so at the end we expect to have a strong market in the future uh but but as i mentioned it's also a good idea to having damage to to be uh to having this main role as always yet a question of the top of your head you know you speak with your clients all the time both payments you're the iocs independent operators taking away pemex which is a whole different animal what are your concerns of the your private sector clients i'm talking the iocs and independent operators are there more based on on you know the international landscape how things are are looking or more about changing regulation and policy down here in mexico what what are their concerns uh well i think at the beginning the new regulation it was a challenge for for them to as newcomers in the in the market understand how mexico uh uh implement all this new energy reform uh also the new the the the new agencies as the asea or or cnh has also to learn about how to implement these so i think at the beginning this uh communication between both parties uh um was a challenge for for for the for the iocs for the new companies uh and and uh well um generally speaking i think that was the the main the main challenge for them okay uh two final questions first any recommendations to any newcomer in mexico well i think uh having uh uh retained some law firms uh as nicaraguas i think it's a good idea because they're in some in many times in many many many things uh uh using the right law firm it's a it's a good idea to to to make business in mexico having the advice of professional law firms such as michaelis it's a good idea that's one of my recommendations and also i think be updated all the time on new regulations and new policies um i think there's too many administrative guidance issued by cnh or also asea or the mexic so it's important to be updated all the time to understand how uh things going uh yeah to understand that with regulators and their different roles because you know you speak about cnh and each of them of course has a different attributions and roles final question um if you could have a conversation with the policy makers in mexico sitting to them having a chat just as we're having right now what would be your main recommendation uh well to keep the mine open i i think the the market in which the competence the the competition it's um it's the the main goal it's in the benefit of every every every everyone in the industry uh to have to the the opportunity to work with uh international uh companies that had uh that they transferred in in many ways their knowledge of and and technology with local resources so it's a good idea to have a competition in the market because we the mexicans workers in the industry are able to interact with international practices so i think that's that that's a a important thing well hector hoffman thank you very much uh general counsel from haliburto in mexico this has been very i really appreciate all your comments taking the time to have this conversation with us and in my end and i have no no more questions uh and i would just want to thank you for your time now thank you i would for your your uh your words that the opportunity and harris lil 500 thank you very much and see you next you've been listening to the legal 500s corporate conversation series