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Mexico Roundtable: New Opportunities in a Changing Landscape

LEFT to RIGHT:

LEFT to RIGHT: George Baker, Baker & Associates; Hugo Espinosa, Baker Hughes, a GE company; Enrique Garza, Garza Tello & Asociados

The PESA Mexico Task Force held a roundtable discussion on Thursday, May 30 at Stress Engineering Services to discuss the political and economic climate in Mexico and the effects on the oilfield services and equipment sector.

In addition to already existing challenges in Mexico, the July 2018 Presidential election added additional uncertainty to the business climate in Mexico. This uncertainty, on top of increasingly problematic payment issues with PEMEX, have created significant challenges to PESA Member Companies with operations in the country.

The discussion was moderated by Mexico Task Force Chair Hugo Espinosa, Sales Director Latin America, Baker Hughes, a GE company. The roundtable featured two Mexico energy industry experts: George Baker, Managing Partner, Baker & Associates, and Enrique Garza, Senior Partner, Garza Tello & Asociados, a Mexico City-based firm practicing in energy law who consults with many U.S. companies working in Mexico.

The two panelists shared divergent views of the situation in Mexico and the prospects and opportunities moving forward for American companies. Baker took a cautious view, contending that issues with PEMEX payments are becoming increasingly problematic and said they represent a significant business risk to U.S. companies in the country. He did not see a quick solution to what he sees as systematic problems at the company.

Garza provided a much more optimistic view of the potential business opportunities in the country, pointing out that opportunities for growth far outweigh challenges that U.S. companies will face. Garza contended that Mexico may have more growth potential than any other oil producing country in the world. Garza urged U.S. companies to work with a local partner who can help navigate both the legal and political situation in the country to avoid preventable mistakes. He also discussed a financial structure that can be used in contracts with PEMEX to avoid payment delays and help guarantee payment for services should a dispute arise.

During an active Q&A session, PESA Members shared experiences they have had operating in the country and questioned both panelists about their opinions of prospects going forward. While there was divergence on some analysis, both panelists agreed that they expect the new administration to acknowledge the importance of the oil and gas sector to Mexico’s future, and that the industry can play a role in supporting many of the social and political goals of the administration.

For additional information on the roundtable or future Mexico Task Force events, please contact PESA Vice President Government Affairs, Tim Tarpley at 713-932-0168.

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