NAFTA doubts cloud Mexico’s Round 2.4

MEXICO CITY, November 2, 2017 – The possibility of a collapse of the NAFTA treaty is threatening to undermine Mexico’s ambitious oil and gas investment programme including deepwater Round 2.4 to be held in January 2018, international media reported on Thursday.

Wary of losing key legal protections such as the Investor State Dispute Settlement, an international arbitration procedure that can override local courts, super-majors such as Chevron and ExxonMobil could scale down their presence or even stay out of Round 2.4 and the subsequent shallow-water Round 3.1 planned for March 2018, Reuters reported.

“Future investment without those investment protections of NAFTA will take into account the higher level of risk of any dispute not being settled in a more fair manner,” Tim Callahan, Mexico general director of BHP Billiton, told the agency. “I don’t think any of us want to be the first to test in the Mexican courts how they’re going to rule on any disputes when it comes to oil.”

BHP Billiton is the operator of the giant Trion field in the Gulf of Mexico, which it won during Mexico’s first deepwater round in December 2016.

Nevertheless, while leftist politicians have called for a review of oil and gas contracts, Mexican Secretary of Energy Pedro Joaquín Coldwell alongside some anonymous industry sources pointed out in interviews with Reuters that the country has adopted protections similar to the Investor State Dispute Settlement in a number of bilateral agreements it has signed.

“I don’t think the industry should be worried,” Coldwell said.

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