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Falling oil prices have rattled the economy, but not Texas energy lawyers. They still have their sights set on the billions of dollars in projects and opportunities for energy companies in Mexico, which is privatizing its dilapidated energy sector and luring foreign investors—many of which want an attorney in Texas.

From cross-border pipelines, to the anticipated bonanza lying underwater in the Gulf of Mexico oil and gas blocks, to the equally huge upgrades planned for an aged power grid south of the border, energy lawyers all seem to have clients interested in Mexico.

"There's definitely been an uptick in our firm's work in the amount of cross-border energy work, with Mexico in particular, everything from transactions to regulatory and litigation," said Derek Anchondo, partner at Greenberg Traurig, who joined the firm in Houston this past year from Adams and Reese. "There are a lot of opportunities right now. The enthusiasm is definitely there."

The ambitious re-opening of Mexican energy sector to investors for the first since 1938 results from the set of reforms signed by President Enrique Pena in 2014, reversing decades of monopoly control over their energy and power sectors. The government wants to lower electric and fuel prices for Mexicans at home and to energize the economy.

Over the past year, Texas firms advised clients in many projects, say the lawyers involved. The ones frequently mentioned were the first pipeline deals being negotiated to carry cheaper American natural gas across the border, and the three historic Gulf of Mexico oil and gas block auctions in 2015 that attracted dozens of foreign bidders who needed representation, especially at the uncertain beginning.

Jones Day in Houston and Mexico City represented a winning major oil company—Eni of Italy—in the historic second oil and gas rights auction in the Gulf in September 2015. Partner Scott Schwind in Houston said although there has been some slowdown in energy work because of declining commodities prices, they have clients bidding in the auctions, clients interested in the pipeline work and they are advising clients regarding new refineries and service stations in Mexico. They also have clients looking at projects to import fuel into Mexico and sell it on the Mexican market, he said.

"It has not resulted in an immediate avalanche of work in Mexico as expected but there is work," he said. Schwind also said slower pace is not entirely unwelcome while Mexico is still transforming its regulatory environment. "They may have gone a bit faster than they ought to and a slowdown has allowed the Mexican government to put things together in a more thoughtful way," he said. He recently represented a Mexican conglomerate in the acquisition of acreage in Texas and has been working with Mexico in creating new production sharing contracts.

Houston energy partner Brian Bradshaw at Morgan Lewis said while 24 months ago Mexico was perceived as a "fantastic opportunity," falling commodities prices tempered enthusiasm in some areas. "Clients are cutting expenditures. Their cash is much tighter and the prospects today for drilling an offshore well are a little bit daunting. But there is volatility in the commodities markets. What goes down will always come back up."

Within Mexico, he said: "Everyone is still interested. There is no perception that the legal regime is Mexico does not work."

That sentiment is echoed by others. "It's a cyclical market. Even when oil and gas prices are low, there are other areas within the energy spectrum that remain very busy," said Anchondo. "The energy reforms have created many opportunities for foreign investors in a range of projects."

On the pipeline side, Mexico's state-owned petroleum company Pemex signed its first major foreign investment project last year, giving two private equity funds a 45 percent stake in its Los Ramones Pipeline Projects in exchange for $900 million. The equity investors were BlackRock and First Reserves. The deal was hailed as demonstrating the confidence foreign investors have in Mexico's reforms. White & Case helped represent BlackRock.

Since then the lawyers say plenty of interest has emerged for pipeline plans laid out last year by Mexico and also for the fourth big auction coming in December which is expected to attract bids from the supermajors—the Exxons or Shells, who have been interested in Mexico for decades.

Other investment opportunities are not just for Big Oil, but for companies that build pipelines, power plants, transmission lines, as well as players in wind and solar. Last year Mexico's state power company announced plans to tender projects for almost $10 billion including an underwater natural gas pipeline for 500 miles from Brownsville to Mexico's Gulf Coast as well as several other pipelines, and power generation facilities. The bidders so far have been both world players and new Mexican companies spun off as private entities with the reforms.

Morgan Lewis is representing a company interested in doing a liquified natural gas project to ship natural gas across the Gulf of Cortez to process in Baja California. Bradshaw said there is at least $10 billion in capital investment required to build all the pipelines outlined in the Mexican plans, and the pipeline projects involve exacting legal work, details and a financial model. "We are representing people building those pipelines," Bradshaw said. One client bid more than once, but those contracts went to Carlos Slim—the Mexican billionaire, he said.

Carlos Sole, co-chairman of the Baker Botts Houston energy practice, said the firm represented clients in the electrical sector and the Gulf bid rounds, but bid rounds he said is "a finite market."

"If you look at the upstream space you have legal work but there's only one winner." He said the firm has some private equity groups or funds looking at making $75 million to $400 million investments but it involves "waiting and seeing and being cautiously optimistic about those opportunities coming together. In Mexico our strategic hope would be that the power development activities accelerate."

Glenn Pinkerton, partner at Sidley Austin in Texas said the firm has seen an increase in the last 15 months with work on gas pipelines and electricity side and they are adding energy lawyers even though enthusiasm was dampened to an extent by falling oil prices. "What you're seeing is a lot of oil and gas companies and large private equity shops setting up management teams in Mexico to look at transactions there."

A handful of big firms have opened Mexico City offices in the last two years, and others are adding energy lawyers in Houston.

At Kirkland & Ellis, which opened an office in Texas a few years ago to handle energy law, partner John Pitts said Mexican energy work is growing. "We are seeing a lot of activity and interest, especially from private equity sponsors interested in investing in reforming Mexican energy markets. Our private equity clients find the valuations are highly attractive." He said the firm now has more than 50 lawyers in the Houston office.

Jose Valero, co-head of Mayer Brown's oil and gas practice in Houston said the reforms in Mexico are "very much on track" and even if there is a slowdown due to oil prices, "it is only a matter of time before the work continues to increase for Texas based law firms." The firm represents clients in the Gulf auctions among other activities.

In the last two years many firms they have been juggling whether to open an outpost in Mexico or expand in Houston. DLA Piper has done both. But Ileana Blanco, DLA Piper managing partner in Houston ,said they also expanded in Mexico City for new business.

"Our deal people are very busy despite the price of oil," she said.

Said DLA Piper Houston partner Glenn Reitman: "When we're talking about U.S. companies being involved in Mexico, they want a Houston lawyer involved."

Reprinted with permission from the April 4, 2016 edition of Texas Lawyer © 2016 ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited.