Judicial Calendar in Mexico's Oil and Gas Sector Flagged by Houston’s Baker Energy Consultancy
MEI 981 Table 1 - Related dispositions and dates
The expropriation of the hydrogen plant belonging to Air Liquide México sets two deadlines, one regarding indemnity, the other, court protection
Air Liquide (XPAR:AI)
HOUSTON, TX, USA, May 2, 2024 /EINPresswire.com/ -- In a new report (MEI Report 981), the Houston energy consultancy Baker & Associates, flags May 10 as the date by which an affected party may contest the amount of indemnity resulting from an expropriation decree concerning the hydrogen plant at Pemex’s refinery in Tula in the central State of Hidalgo.
The decree, issued April 18 and reissued April 25, gives the affected parties ten working days to contest to the appropriate ministry (Energy) the yet undisclosed amount of indemnity that the government is offering to the owner. A complicating factor is the value to be assigned to the twenty-year supply contract signed in 2017.
The Expropriation Act of 2013, meanwhile (in Article 2.III), gives an affected party fifteen working days to seek injunctive relief from the courts. During any subsequent court proceedings, the effect of the expropriation stays in force.
The dates May 10 and May 17 loom large for an investor like Air Liquide México, whose plant has been occupied by Pemex since December 29 of last year.
The report (the fourth in a series) notes that whereas investors in the electric power sector are quick to go to court in Mexico to defend their interests, this pattern does not hold true on the oil and gas side. Investors in this space are concerned about the risk of reputational damage and unofficial exclusion from future investment opportunities and government contracts.
“In the oil and gas sector, legal precedent is rare, and jurisprudence almost non-existent,” observes trial lawyer Juan Carlos Collado, who litigated investor complaints related to natural gas distribution in Guadalajara, the outcome of which resulted in jurisprudence (Supreme Court, 2nd Chamber 193/2011).
“The guardrails against executive overreach regarding the basis for a declaration of public utility can only be established by the courts,” observes George Baker, the principal author of the report. He adds, “The hole in the rule of law in the oil and gas industry in Mexico is much deeper than is generally acknowledged. Investors and contractors typically do not seek court protection, and Pemex also avoids litigation.
It is in this light, the report concludes, that a request for court protection in the oil and gas sector redounds to the benefit of all parties, including Pemex.
George Baker
Baker & Associates, Energy Consultants
+1 832-434-3928
g.baker@energia-mx.com
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