RE: quick question23 Jul 2014 21:31
need the legislation for many reasons. note in particular that although companies like geo are mexican, even they have been very, very restricted on the range of work and investment they can do ..... for decades, pemex has had it sewn up. but pemex very sclerotic, many assets are well known but under-productive. so the mexican government is trying to bring in private sector expertise and energy, partly by bring in overseas money and technical know-how, but **also by making more of the cake available to mexican private sector competitors to pemex.**
(meantime, the legislation will also lead to pemex partnering with foreign big boys like chevron for the really pricey stuff, like deep water exploration and drilling, per bilbo's post. i think we'll be happy to let those big others get on with the very large scale, very highly capital intensive stuff like that, too big/expensive/risky for asta at this point)
in terms of political risk, note that what mexican government *really* doesn't want to do is open itself up to the charge amongst its own electorate, and opposition parties, that is is just giving away mexican resources to foreigners. overseas companies trying to get in on the action need to tread diplomatically, which includes appropriate local partnerships, so that they are seen as adding value for mexican companies and mexican investors too, rather than just snapping up cheap assets and robbing the country. (probably one or two shark operators will get in and do just that with one or two assets, but once spotted anyone operating like that would be very unlikely to win further licences / bidding permissions etc - they would get shut out of future opportunities).
hence the crucial importance of asta getting the right local partner to begin with, and spending time on the ground getting connections and local relationships right, rather than just getting a chequebook out.
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