Energy

Mexico’s Constitution reserves to the State the exclusive control over the nation’s oil and gas resources, as well as the provision of electric power generation, transmission and distribution utility services.

Despite this general constitutional prohibition, Mexican law has created several limited arenas where private investment in the energy sector is authorized.

In the power sector, private firms may generate and sell power to the state-owned utility under the IPP (Independent Power Production) scheme. The law also allows for self-generation and co-generation in the industrial setting and private power generation for export.

On the other hand, in oil and gas exploration and production (E&P), oil and service companies can execute public works and provide services to Mexico’s state-owned oil conglomerate, PEMEX, provided thah compensation is not risk-based. In the gas transmission and distribution segment, foreign participation is even more liberalized, with many of the world’s largest players active in building and operating domestic and cross-border gas pipelines, local distribution networks and LNG plants, among other activities. 

Legal services offered by Solcargo to assist foreign energy firm’s capitalize on this market include:

• Lobbying and advocacy before the executive and legislative branches re: proposed reforms

• Processing applicable energy permits and consents before the CRE (Energy Regulatory Commission), SENER (Energy Secretariat)

• Reporting on and analyzing energy sector legal and constitutional framework as it applies to a specific activity

• Reviewing and analyzing the legality of investment proposals

• Drafting, analyzing, negotiating and advising the client with respect to its contractual arrangements with state-owned and private clients suppliers, customers, subcontractors, JV partners and off-takers

• Identifying, evaluating and mitigating potential and actual environmental liabilities and risks associated with a given project

• Addressing and managing land use, ownership and rights-of-way issues and consents before federal, state and local authorities, communities and landowners

Furthermore, Solcargo has close relationships with top PEMEX officials – both at the corporate level and in the field - as well as with recognized leaders in the Mexican energy consultancy business, which provide us access to all levels of PEMEX, the CFE, CRE, and the Secretariat of Energy, enabling us to keep our finger on the pulse of this dynamic and controversial sector of the Mexican economy.

Representative clients and deals

Solcargo and its team of professionals have represented numerous clients in developing and implementing energy projects in Mexico. Clients have included host governments, project sponsors, investors, banks, developers, operators and service providers in areas such as upstream oil & gas, natural gas distribution and transportation, LNG, electric power generation, renewable and waste-to energy, and Kyoto Protocol Clean Development Mechanism initiatives.

Clients have included AES, for whom we served as lead counsel in structuring and implementing the legal aspects of a US$300 million Independent Power Production project with CFE, including:

• Designing and structuring project finance agreements and documentation

• Structuring and negotiating agreements with CFE, for co-investment, interconnection for power plants, as well as all agreements necessary for the construction of electric power plants

• Obtaining CFE permits for self-supply, cogeneration and exportation of electricity

• Structuring and negotiating equipment lease and acquisition agreements

• Structuring contractual guidelines

Past Solcargo energy clients include Gaz de France (LDC concession), Banque Paribas (PEMEX risk management contract), Paramount Resources (upstream gas), Thermo Design Ltd. (upstream PEMEX service contractor), as well as the Province of Alberta and the Government of Canada (government relations), among others.

Useful government sites: