About

Number of years practice: 25

Principal practice areas: Energy Project Development, Project Finance, and Mergers and Acquisitions, with a particular focus on the US and Latin America

Bar admissions: Florida, Texas

Languages spoken: English, Spanish

What differentiates your Mexico-facing practice from those of your US competitors and peers?
Over my 25 years of practice involving Mexico, including having worked two years in Mexico City for a Mexican law firm, I offer deep insight into the legal, business, and political landscape of the country, as well as an understanding of the benefits and risks of doing business in Mexico. This insight is also shaped by my experience doing projects in the United States and throughout Latin America.

For example, I grew up helping renewable companies establish themselves and compete in the United States as the industry first took off in the 2000s. As renewables then spread to Latin America in the next decade, I was able to help my developer clients identify and avoid risks from the lessons learned in the US, whether it’s the mistake of overrelying on merchant sales, even if energy prices have historically always been high, or a lack of understanding of curtailment, basis, or imbalance risk in contracting power sales. For example, power prices in Chile, Mexico, and other jurisdictions plummeted from USD 200 per MWh to USD 20 or 30 per MWh as renewable penetration rapidly increased; something we had seen in the US. I continue to help my clients with these risks in Mexico as Mexico’s electric market continues to develop.

In petrochemicals, when private investment in energy opened up in Mexico, we were able to do a first-of-its kind transaction with CFE, which had purchased large amounts of pipeline transport capacity to anchor the buildout of 16 pipelines from the United States and within Mexico. In the transaction, my client was able to acquire and sell to CFE natural gas in the US, and CFE in turn then sold a similar quantity of natural gas to my client’s $1.3bn ammonia project in Mexico, effectively allowing the project to benefit from abundant, low-cost natural gas in the United States. We were able to bring our deep knowledge of international natural gas sales and marketing to Mexico, which previously had been exclusively controlled by the Mexican government and was without precedent.

On the flip side, US investors often do not understand the risks of investing in emerging markets, and I help them understand these risks, whether it is the need to buy political risk insurance or hedge currency exposures or make sure their investments have the appropriate risk adjusted returns to account for the added risk.

What are the advantages and disadvantages of advising Mexico-based clients from an office in the United States?
I typically advise on high-level deal structuring of projects, as well as draft and negotiate large-dollar energy project developments, financings, acquisitions, and dispositions (power and downstream), including providing world-class, state-of-the-art strategies, protections, and flexibilities for my clients operating throughout Latin America and the US, which is advantageous and appropriate to do from an office in Houston. The disadvantage of not being based in Mexico is that I’m not as close to my clients in Mexico or as able to provide day-to-day advice on normal operating matters involving Mexican law. Thankfully, Thompson & Knight has offices in Mexico City and Monterrey and my partners based in those cities are able to provide that advice, which gives us the ability to provide comprehensive service to our clients in Mexico, including both a deep understanding of trends occurring on the ground in Mexico, as well as those occurring internationally, all of which is essential in our rapidly evolving world, whether it’s the evolving nature of Mexico’s energy reform and changing policies of the new president, or the large macro shifts in the global economy, trade wars, and the rise of populism.

What changes in the commercial and/or legal market do you anticipate in the 12 months ahead in Mexico? Mexico’s new president, López Obrador, who was elected on a more left-leaning platform, has taken a number of actions that have caused some concern for business investment in Mexico. The new administration cancelled a $13bn bond offering for Mexico City’s new airport, and also suspended renewable energy auctions and oil and gas tenders contemplated under the energy reform enacted by the prior administration. López Obrador’s administration also challenged CFE’s obligation to make take-or-pay payments under pipeline transportation agreements entered into by CFE. CFE filed arbitration under such agreements against the pipeline companies, disputing the force majeure claimed by the companies that would permit them to receive the payments from CFE despite the pipelines being delayed and not completed on time. The pipeline companies, according to news reports, settled the dispute, agreeing to reduce the rates charged CFE.

These type of actions have worried business investment in Mexico, as have actions taken by Donald Trump’s administration in the United States, including threats related to terminating NAFTA, illegal immigration, and the imposition of tariffs.

Although these are uncertain times globally, I believe López Obrador recognizes the huge opportunity Mexico has to grow its economy and improve the standard of living of its people under his tenure. The pipeline network in place and under construction gives Mexico access to arguably the lowest cost natural gas in the world. That low-cost energy flows to power plants and industry, reducing electricity, manufacturing, and petrochemical costs while also serving as a cost-effective source of cleaner energy than diesel or fuel oil for use in transportation fleets and industry. In essence, the pipeline network creates an ideal platform for Mexico’s economy to thrive while also serving as a bridge as Mexico develops its own abundant natural gas resources.

This access to low-cost energy, when combined with Mexico’s strong and competitive labor force, investment grade rating, and access across the border to the world’s largest market, give Mexico a once-in-a-generation opportunity to make large strides in its development. The U.S.-China trade war, and China’s increasing labor costs, also make Mexico an attractive option for global businesses looking to diversify away from China and relocate to the strongest economy in the world.

Going forward, the trick for López Obrador is to navigate working with the United States administration, and its penchant for trade and immigration confrontation, attracting capital and technology, and managing an energy reform that strengthens Mexico’s state-owned institutions and maximizes the benefits for Mexico and its people. I believe López Obrador understands the opportunity and is actively working to capitalize on the benefits. Thus, absent uncontrollable macro political and economic events, we should see López Obrador move more to center, while looking to promote more joint ventures between PEMEX and CFE with private energy companies, to both create jobs and obtain state-of-the-art technology to efficiently access Mexico’s abundant oil and gas resources. We should also see a cautious but prudent approach to moving forward with parts of the energy reform, but with a focus on job creation and tools for Mexico to be a more active participant in the development of its resources.

What is your perception of in-house counsel’s priorities in terms of client service when working with US-based law firms?
In-house counsel first look for top-level expertise in the matters they are handling. From there, they greatly care about quick turnaround on quality work at reasonable prices with outside counsel who are reliable, responsive, and easy to work with.