Page 5 - LatAmOil Week 08 2022

LatAmOil COMMENTARY LatAmOil

The company declared in its notification, oft-stated preference for ensuring that state-run
though, that it would prefer not to take the case entities such as the national oil company (NOC)
to court. “Given its desire for an amicable reso- Pemex play the leading role in the country’s oil,
lution, Monterra invites Mexico to resolve the gas and power industry.
claims prior to arbitration,” the document said. It is that preference that is likely to make
Mexico City reluctant to choose the option of
Taking a stand returning the fuel terminal to Monterra’s con-
Even so, the company does not appear to be trol. (Indeed, it is that preference that drives
ready to compromise just yet. Lopez Obrador’s entire energy policy, which is in
According to a report from Dow Jones opposition to the reforms enacted in 2013-2014
Newswires, the company has disputed CRE’s by his predecessor Enrique Peña Nieto. The cur-
contention that it did not produce all required rent president would like to see those reforms,
documentation and failed to comply with which aim to foster competition and demonop-
regulations in other ways. Rather, Monterra olisation, made irrelevant by the time his term
argued that it strove to maintain good relations ends in 2024.) Monterra has
and communications with the commission It remains to be seen whether the US com-
while also upholding the relevant rules and pany’s decision to seek relief within the frame- disputed CRE’s
requirements. work of the NAFTA and USMCA agreements
“We have gone above and beyond to resolve is an effective strategy. The trade agreements do contention that it
the issue co-operatively,” said Arturo Vivar, the include provisions that are designed to safeguard failed to produce
company’s CEO. the interests of US firms that invest in Mexico,
In return, it said, CRE’s office “harassed” including energy operators such as Monterra. all required
Monterra’s representatives in Tuxpan “with At the same time, USMCA includes provi-
duplicative and pretextual requests for infor- sions stating that both the US and Canada rec- documentation
mation and documents that it already had.” ognise Mexico’s right to establish its own energy
The commission also staged “a series of sham policy via constitutional reforms and new leg- and comply with
inspections in search of a pretext to shut down islation – and those provisions were included regulations in
[Monterra’s local] operations” in 2020 and 2021, because Lopez Obrador refused to sign the deal
it claimed. without them. other ways
The company tried to proceed with work on Nevertheless, the agreement also states that
the terminal despite these challenges, “[con- Washington and Ottawa extended this recogni-
tinuing] construction of the storage terminal, tion “without prejudice to their rights and rem-
a massive, multi-phase undertaking that car- edies” under USMCA.
ried substantial investments,” Monterra added. Under these conditions, it’s not clear how
These efforts ultimately failed to prevent CRE effective Monterra’s strategy will be. Daniel
from intervening, and since then, “the Mexican Sanchez, a partner at the Baker McKenzie law
courts have turned a blind eye and thwarted firm, told S&P Global Platts earlier this week
[Monterra’s local office’s] attempts to have its that the company was taking a more aggres-
day in court, placing [it] in a state of defence- sive approach than other firms to defending its
lessness,” it said. interests against Lopez Obrador’s state-oriented
“Mexico was not interested in the legality of energy policies.
the product stored at the storage terminal; their “I am a little bit surprised that Monterra is
only goal was to shut the storage terminal down going straight to arbitration,” which many other
to further Mexico’s protectionist policies,” the investors have viewed as the last resort, Sanchez
document added. said. He speculated, though, that if Monterra
was able to secure relief in this fashion, other
AMLO’s policy preferences companies might follow its example.
That last remark was a reference to Mexican If so, there might be more threats of lawsuits
President Andres Manuel Lopez Obrador’s before Mexico’s next presidential election.. ™

Lopez Obrador (L) and Trump (R) signed USMCA in 2020 (Photo: WhiteHouse.gov)

Week 08 24•February•2022 www. NEWSBASE .com P5