Vladimir Fet Quoted on Mexico’s Business Environment in Wake of Energy Reforms

For its article “Mexico Energy Reforms Offer Equal Amounts of Opportunity, Uncertainty, Say Experts,” Natural Gas Intelligence quoted remarks made at the LDC Gas Forum Rockies & the West conference by Akin Gump global project finance counsel Vladimir Fet.

Focusing on the business environment and culture in Mexico, Fet noted the importance of engaging advisers who have extensive experience in-country, “With smart planning today in Mexico, you can minimize your tax rate very significantly. Of course, you do need to employ people who know how to get this done, tax advisers and attorneys, as well as local counsel. The other essential is a joint venture agreement with a local partner.”

Among the areas in which familiarity with local conditions is of the greatest importance, he noted, is land rights, given that there is both private and communal land ownership.  Fet said, “When you are dealing with a project on which some of the parcels are located on communal-owned land, it is very important to understand who legitimately in the community has the authority to sign documents, and basically who has control of the land. That is not always clear.”

SNL Daily Gas Report, reporting on Fet’s presentation, also quoted him to say that there are notable risks for U.S. companies pursuing energy projects in Mexico such as political and economic uncertainty as well as security issues. Therefore, he encourages U.S. companies to practice their due diligence before entering the Mexican marketplace and to form Mexico-based entities, hire local counsel, become familiar with land rights and exercise caution regarding contract writing and taxation matters, according to the article.

Fet added, “Are you going to be able to find a reliable off-taker that will be willing to provide the return you want for the term you want? It remains to be seen how easy or difficult it will be in the coming future.”