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Singapore-Based Malaysian Coastal Faces Challenges in Mexico – Energia.com

PR-Inside.com: 2018-05-17 02:16:01

Singapore-Based Malaysian Coastal Faces Challenges in Mexico – Energia.com

Mexico Energy Intelligence®
George Baker, +1 (832) 434-3928 cell
Energia.com
g.baker@energia.com

Following the Mexican Energy Reform after 2013, investors from around the world—especially Asia--came to Mexico. Investments have been made by both oil and service companies. Some of these have exceeded expectations, while others face difficulties owing to misplaced expectations and differences in cultural, legal and regulatory environments.

An investment that faces challenges is the relationship of Singaporean company Coastal Energy Solutions, Pte, and its Mexican partners, TRESE, SIC, ARDICA and ALHER. Coastal, whose parent company is Coastal Contracts Ltd (based in Malaysia), in 2016 invested around USD 190M in the construction of a unique gas compression jack-up platform “Agosto 12” for service to Pemex, the Mexican State Oil Company. The rig was leased to a Mexican consortium with the understanding that funds from Pemex for the rental and operations would be deposited in an escrow account from which all parties would be paid.

Arising from an imprecise clause in a trust agreement, Coastal withheld funds corresponding to the Mexican consortium, which has forced one of the four companies to file for insolvency and one of these has temporarily restructured its debt with creditors.

A federal court in Mexico City recently determined that such retention of funds is illegal and ruled that Coastal must reimburse the retained amounts. Coastal filed for injunctive relief through the Fifth District Court, which previously had granted it such relief against an earlier court order; on this occasion, however, the relief filing was denied.

“While the parties work out their differences and reestablish common goals, the safety of the vessel is of concern,” says David Blacio Cedillo, a Mexican safety expert, said in an interview at Offshore Technology Conference in Houston: “Regardless of who turns out to be responsible for the job losses and damages to third parties caused by this situation, the big consortia need to analyze the liability concerning safety in such a project. He added that “knowing and being aware of the risks and still hindering the flow of funds makes you the only liable party in case of an unwanted event.”

“Messy situations like this one illustrate a few of the challenges that new-to-market companies face in Mexico. They can face litigation from avoidable misunderstandings and mishaps,” observes market analyst George Baker.

Messy situations like the one with Coastal Energy Solutions, Pte, and its Mexican partners illustrate a few of the challenges that new-to-market companies face in Mexico. They can face litigation from avoidable misunderstandings and mishaps.

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