Overview

On December 21, 2013, Mexico’s sweeping and historic energy reform bill formally became law. On August 12, 2014, a package of energy reform legislation became law in Mexico, which includes nine new laws as well as amendments to existing laws, implements the December 2013 constitutional energy reform and establishes a legal framework for Mexico’s energy industry.

For a detailed analysis of the Hydrocarbons Law and Hydrocarbons Revenue Law, see our Legal Update, “Analysis of Mexico’s New Hydrocarbons Regime.”

For a detailed analysis of the Electric Industry Law, see our Legal Update, “Analysis of Mexico’s New Electric Industry Law.”

Full Spanish-language copies of the enacted bills are available as published in the Official Daily Newspaper (Diario Oficial de la Federación).

On August 13, 2014, SENER announced the results of the Round Zero process, in which PEMEX was granted 83% of Mexico’s proven and probable reserves or 2P reserves (as requested by PEMEX) and 21% of Mexico’s prospective resources (instead of the 31% requested by PEMEX). A Spanish-language summary of the Round Zero results as published by SENER is available here.

SENER announced that Round One will include: (i) 169 blocks, comprised of 109 exploration blocks and 60 production blocks and (ii) 14 blocks under joint ventures with PEMEX. The draft bid terms for Round One are expected to be published in November of this year. The tender process is expected to commence in the first quarter of 2015, and contracts are expected to be awarded between May and September of 2015. A Spanish-language summary of the Round One areas as published by SENER is available here

Beratungsfelder

Praxis

Mayer Brown has significant experience in Mexico, demonstrated by the many types of deals represented below. Our experience in developing and financing power projects in Mexico includes both renewable and traditional power projects financed by export credit and other bilateral agencies, multilateral agencies, commercial banks and project bonds. We have experience that extends back to the inception of the Mexican independent power producer program and self-supply regimes for electrical power generation. And that experience continues: this year we represented the sponsors in the successful closing of the El Porvenir 54 MW renewable energy self-supply project.

Additionally, we maintain excellent relations with leading Mexican law firms and are accustomed to providing seamless representation in concert with them.

Selected examples of Mayer Brown experience:

Oil & Gas

  • Incentive-based E&P service contracts. We have recently represented a US oil company in the evaluation of an opportunity to participate in a tender process conducted by PEMEX for the granting of incentive-based E&P contracts in Mexico, which included the preparation and negotiation of consortium and bid documents.
  • PEMEX. We advised PEMEX in connection with the Transboundary Hydrocarbon Reservoirs Agreement of 2012 between the United Mexican States and the United States of America (often referred to as the US-Mexico Framework Agreement) for the joint development of certain cross-border hydrocarbon reservoirs in the Gulf of Mexico. In the context of that engagement, we advised PEMEX on international law and precedent regarding cross-border unitization agreements, with a particular emphasis on the regional precedent for such agreements in Latin America.
  • Tabasco Jackup, S.A. de C.V. We represented HSBC and Citibank in a $175 million bridge term loan to finance the acquisition of a jack-up drilling rig from a ship builder in China.
  • North Baja Pipeline. We represented TransCanada Corporation in the sale of North Baja Pipeline, LLC, an 80-mile natural gas pipeline that extends from southwestern Arizona to the California/Mexico border, to TC PipeLines, LP. The sale included a combination of cash and common units totaling approximately $395 million.
  • Drilling Rigs in the Gulf of Mexico. Mayer Brown represented HSBC and Citibank as arrangers of a US $275 million financing for the acquisition of four drilling rigs by subsidiaries of Grupo México. The drilling rigs will be used in the Gulf of Mexico and chartered to Petróleos Mexicanos.
  • Mayakán Pipeline. A current Mayer Brown partner advised on the project financing of the approximately 700 km Mayakán natural gas pipeline on the Yucatan Peninsula, Mexico. This project was the first privately owned open access pipeline in Mexico and it was named Deal of the Year by Institutional Investor.
  • Morelos Pipeline. We represented Mitsubishi Corp. in its bid with Techint for CFE’s 25-year Morelos natural gas pipeline concession in Mexico.

Project Development & Financing

  • Energía Sierra Juárez. We represented the sponsor in the 155 MW Energía Sierra Juárez Cross-Border Wind Energy Project. The project includes the construction and operation of a Mexico-US cross-border transmission line and the project will sell its output to a US utility. The transaction achieved financial close in June 2014 and the project is expected to achieve full commercial operations in 2015.
  • Oaxaca II and Oaxaca IV. We represented the sponsor and project companies in the 102 MW Oaxaca II and 102 MW Oaxaca IV Wind Projects in Mexico. These were selected as the Latin America Project Bond Deal of the Year 2012. 
    El Porvenir Project. We represented Compañía Eólica de Tamaulipas (CETSA) in connection with the $130 million project financing from the North American Development Bank and Banorte to fund the construction of a wind farm in Reynosa, Mexico.
  • La Yesca. A current Mayer Brown partner advised our clients on the more than $1 billion La Yesca Hydroelectric Project in Mexico. This was named Americas Power Deal of the Year for 2007 by Project Finance International, and in 2010 we advised WestLB in connection with the expansion of the credit facilities for the project.
  • ABN-AMRO. We represented ABN-AMRO in connection with bridge financing of Gaz de France subsidiary’s purchase of a gas concession in Mexico.
  • La Ventosa/La Mata. We represented our clients in the project financing in La Ventosa/La Mata, a major wind power facility near Oaxaca, Mexico. The $200 million, 67.5 MW project is sponsored by EDF Energies Nouvelles’ Mexican subsidiary Electrica del Valle de Mexico (EVM). This was chosen as the Ex-Im Bank Deal of the Year 2010.
  • Nuevo Pemex Cogeneration. We represented our clients in the $700 million, 300 MW Nuevo Pemex cogeneration facility in Tabasco, Mexico. The facility is the first of a planned series of nine similar projects that has been conceived to add more than 3,000 MW of power generation capacity in Mexico. This was named Latin America Power Deal of the Year 2010 and Latin America Deal of the Year 2010 by Project Finance magazine.
  • Gas-Fired Cogeneration Power Plant. We are representing an international Asian company in the joint development of a gas-fired cogeneration power plant.
  • Bajio IPP Project. We advised our client on the $440 million financing of the 601 MW Bajio IPP Power Project in Guanajuato, Mexico, which was named Project Finance magazine’s Latin America Merchant Deal of the Year 2000.
  • Campeche Project. A current Mayer Brown partner represented the development and financing of the Campeche Project, an approximately 250 MW power generation facility in the State of Campeche, Mexico.
  • El Cajón Hydroelectric Project. A current Mayer Brown partner represented the successful closing of the $100 million bridge and the $680 million construction financing for the 750 MW El Cajón Hydroelectric Project in Mexico. This transaction had been the largest financing to date in the Mexican power sector and was named Latin American Deal of the Year for 2004 by Project Finance International and Latin America Renewables Deal of the Year for 2004 by Project Finance.
  • Ex-Im Bank. We represented Export-Import Bank in the $229 million financing of a 120km, 36" diameter natural gas pipeline, including 60,000hp related compression facilities, to connect existing Pemex pipeline system assets in Tamaulipas State, Mexico.
  • Morelos Pipeline. We represented Mitsubishi Corp. in its bid with Techint for CFE’s 25-year Morelos natural gas pipeline concession in Mexico.
  • Altamira III/IV. We represented Export-Import Bank of the United States in the $590 million financing of the 1,036 MW Altamira III/IV IPP project in Altamira, Tamaulipas State, Mexico, with CFE as offtaker.
  • Mérida III Project. A current Mayer Brown partner drafted the related power purchase agreement for the Mérida III Project, Mexico’s first IPP.
  • Waste-Fuel Power. We represented Power Generation Inc. and Entergy Power as developers in the development of a 300 MW waste/fuel power plant in Nuevo Leon, Mexico.
  • Mexico’s Public Service Electricity Act. A current Mayer Brown partner advised CFE on the drafting of the regulations that implemented Mexico’s Public Service Electricity Act to permit for the first time private sector IPPs.

Corporate Transactions/Private Equity

  • Project Divestitures. Represented PRENEAL SA in its $89 million sale of two power project companies, Energía Alterna Istmeña, S. de R.L. de C.V. and Energía Eólica Mareña, S.A. de C.V., which own a 396 MW late-stage wind energy project in Oaxaca, Mexico, to a consortium of investors comprised of Macquarie Mexican Infrastructure Fund, Macquarie Capital and Fomento Economico Mexicano SAB (FEMSA).
  • Carbón II. A current Mayer Brown partner represented CFE in connection with the proposed but ultimately abandoned privatization of the Carbón II 1400 MW electric generation facility.