The extent to which the AMLO administration, which will take the reins of government on December 1, reviews contracts will private companies should directly influence the pace of foreign investment in Mexico’s energy sector, according to Houston-based attorney Francisco Rivero. Rivero, Global Co-Chair of the law firm Reed Smith’s Latin American Business Team, recently shared with Rigzone some insights on what private energy companies should watch for given the evolving situation in Mexico’s government. Read on for his perspective.

Rigzone: If you’re with a foreign oil and gas BOP Blow Out Preventer repair company gulf coast that’s invested in Mexico’s oil and gas industry, what are some actions that the incoming government could take in the near term that would be worrisome?

Francisco Rivero: Compliance was a central theme for all major candidates to the Mexican presidency. Although the incoming administration has signaled that it will respect energy reform legislation passed under the previous administration, and that it will honor existing contracts, the administration has also noted that it intends to conduct a review of contracts with private companies from a compliance perspective.

Much will depend on the underlying facts in each situation and how aggressively the new administration pursues enforcement of Mexico’s wide-ranging compliance statutes, which include, but are not limited to, the General Law of Administrative Responsibility or Ley General de Responsabilidades Administrativas. Although it remains to be seen, the administration may also potentially exercise its discretion under existing energy reform legislation to rebalance Mexico’s oil and gas industry in favor of state owned entities as opposed to private companies.

Rigzone: Is there still any line of defense or recourse for private companies should any of these actions occur?

Rivero: Yes, but it is necessary to be proactive and to have a plan in place to mitigate potential risk. The shift in presidential administration will not occur overnight. Companies – and especially multinational entities with investments and operations in Mexico – would be wise to dedicate the next five months prior to a change in administration to ensure that their respective houses are in order and to avoid being the poster child for the types of compliance issues that all of the major candidates to Mexico’s presidency said they would combat as a core campaign promise.

Undertaking a thorough compliance review of major transactions and ensuring that, to the extent possible, all requirements have been met with respect to issues such as permits, licenses, environmental concerns, etc. have been complied with represent key starting points for risk identification and mitigation. Particular focus should likewise be paid to any and all possible touchpoints where such companies or their agents have or will interface with governmental authorities.