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Monday, November 16, 2015

US-Mexico Bar Association: 'Energizing the US-Mexico Region'

George Baker, Mexico Energy Intelligence

This report provides a partial record of the panel discussions and offline conversations about energy questions that concerned speakers at the annual meeting of the US-Mexico Bar Association, which was held in Houston, Texas on November 4-6.

The keynote speaker was Carlos Morales Gil, the CEO of PetroBal, the Mexican start-up that just won a block in the most recent CNH (National Hydrocarbons Commission) bid round. To the disappointment of some members in the audience, his remarks were limited to general remarks about the laws of the energy reform and there was no Q&A.

The topic that most concerned some of the speakers was Article 20 of the Hydrocarbon Law that exempts the administrative rescission of a CNH contract from arbitration. Speakers made two key observations:

1)    CNH is wearing two hats: a/ counter-party to the contract; and b/) the regulator, creating confusion as to where the line is to be drawn between a commercial decision (therefore arbitrable) and an act of government.

2)    Excluding from arbitration actions that affect the commercial interests of a US or Canadian party may violate rules of NAFTA.

In an offline conversation, one of the panelists recalled that the decision to exclude administrative rescission from arbitration came from the President's office. "We told them that this measure would cost Mexico a lot of money; but they replied that it was needed for reasons of State."

Finally, you might find my column in Milenio of interest. It describes, anecdotally, a challenging aspect of the Pemex workplace. The column received only 13 comments, but there should have been 113,000.

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"US-Mexico Bar Association: Panelists raised questions about energy law," by George Baker (MEI Report 794, US-Mexico Bar Association, Nov. 13, 2015).  George Baker is the publisher of Mexico Energy Intelligence, part of Energia.com, Baker & Associates, Energy Consultants, Houston, TX. He can be reached via e-mail at g.baker@energia.com.

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