Mexican officials, seeking investors, tout reforms to energy sector _lowres

Advocate staff photo by BRYAN TUCK -- Hernan Gonzalez, chief representative in Mexico for Louisiana economic development, speaks Thursday during a meeting on new business opportunities in the Mexican oil and gas industries at the LITE Center in Lafayette.

After decades of being Mexico’s closed and inefficient national oil company, Pemex now is open for business and needs Louisiana know-how to extract the abundant hydrocarbons that lie offshore in deep and shallow waters, Mexican business officials said at a forum here Thursday.

“We’re beginning a new era in Mexico. … Pemex is looking for partners,” Mauricio Garcia Palacios, a Mexican oil industry association executive, told the audience gathered at the LITE center for the second Lafayette forum in the past two months to tout Mexico’s new openness. Both forums were organized by Le Centre International de Lafayette.

Pemex, short for Petróleos Mexicanos, was overhauled through constitutional and legislative measures within the past year that now allow for direct foreign investment in oil fields. The reforms that changed Pemex were spearheaded by President Enrique Peña Nieto, who took office in December 2012.

Those reforms could produce windfalls for Louisiana companies, from small and midsized service firms to independent producers, Palacios and other Mexican industry executives said to about 100 people at the conference.

During a conference break, Angela Cring, executive director of the Lafayette-based Louisiana Gulf Coast Oil Exposition, said Louisiana companies she represents are taking a wait-and-see approach.

“People are cautiously assessing the situation” in Mexico, Cring said. “There is a lot of interest in that market, but companies are waiting to see if the promises (Mexico and Pemex) make will come to fruition.”

Mexico now has a schedule for sectors to open up to outside investors and businesses: The country currently is open to proposals for natural gas distribution, gas processing and refineries. Next year, it will be oil and gas storage and distribution projects and retail gas station operators. In 2017, businesses that specialize in the import and export of oil by-products will be welcomed. In 2017, Pemex also will accept proposals from onland shale natural gas producers, Palacios said.

Pemex from now until 2018 will seek partners in developing different offshore areas for oil and gas production, in both shallow and deep waters. Palacios said Pemex needs both the technology and financial resources outside companies can bring. Palacios is president of The Association of Southeastern Mexico Oil Companies, a conglomeration of service companies in the Mexican state of Tabasco.

The focus on improving Pemex’s efficiency comes after years of flagging production brought on by inefficiency and having to hand over to the Mexican government a huge chunk of revenues each year. Though there are billions of barrels of oil beneath the offshore waters of Mexico, the country needs outside expertise and billions of investment dollars to get to it.

Hernan Gonzales, a veteran Pemex oil and gas hand who now is Louisiana Economic Development’s man in Mexico, said his country has taken giant steps in the past few years. The next few years will be the trial-and-error phase, he said.

Jose Javier Hernandez, an attorney with Mexican law firm Dagdug Rangel Abogados, said Mexico has amended its laws to clarify tax laws, protect copyrighted materials, prevent money-laundering operations and codify royalty rules.

“It’s more clear, it’s more organized,” Hernandez said.

He said U.S. companies thinking about doing business should hire local legal counsel and other professionals. He said he’s seen U.S. companies set up shop in Mexico, start importing products for sale then get surprised when the taxes hit a rate of 35 percent.

“You have to be careful,” he said.

Philippe Gustin, executive director of conference organizer International Center, said there will be another business-with-Pemex event sometime in December at the LITE Center.