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

HOUSTON–(BUSINESS WIRE)–#Pemex–Following the Mexican Energy Reform after 2013, investors from around
the worldÔÇöespecially 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 ÔÇ£Agosto 12ÔÇØ 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.

ÔÇ£While the parties work out their differences and reestablish common
goals, the safety of the vessel is of concern,ÔÇØ says David Blacio
Cedillo, a Mexican safety expert, said in an interview at Offshore
Technology Conference in Houston: ÔÇ£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 ÔÇ£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.ÔÇØ

ÔÇ£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,ÔÇØ observes market analyst George
Baker.

Contacts

Mexico Energy Intelligence®
George Baker, +1 (832) 434-3928 cell
Energia.com
[email protected]