A United States oil services group has filed a US $100-million legal claim against Mexico with the World Bank, arguing that the government has breached investor protections enshrined in the now-defunct North American Free Trade Agreement (NAFTA).
According to a report by the news agency Reuters, a group led by Texas-based oil and gas company Finley Resources Inc. presented a claim to the bank’s International Centre for Settlement of Investment Disputes (ICSID) on May 12. The Fort Worth-based company, which was awarded two oil tenders in Mexico and negotiated a third drilling service contract with the state oil company Pemex, alleges that Mexico failed to honor NAFTA agreements.
NAFTA was replaced by the United States-Mexico-Canada Agreement (USMCA) in July.
MWS Management Inc. and Prize Permanent Holdings are also part of the group that initiated the legal action.
Andrew Melsheimer, a lawyer for Finley, said the company turned to the arbitration court because efforts in Mexican courts to enforce its contracts had stalled.
Reuters, which noted that cases filed with ICSID can drag on for years, reported that Finley’s claim is the first by a U.S. oil services company against Mexico since NAFTA was replaced by USMCA.
Melsheimer asserted that Mexico promised that Finley’s investments would be protected but Mexican courts provided “little to no movement” when the company launched legal action. In contrast, Mexican oil services companies received more favorable treatment when they filed similar claims, the attorney said.
Reuters said neither Pemex nor Mexico’s Ministry of Foreign Affairs responded to requests for comment.
Melsheimer said Pemex failed to pay for services provided by the companies in the group led by Finley Resources. He also said that Mexico didn’t honor some of the contracts awarded to them.
Finley and dozens of other companies entered Mexico’s gas and oil sector after the previous federal government’s 2013–2014 energy reform opened it up to foreign and private companies for the first time in almost 80 years.
President López Obrador is now determined to “rescue” Pemex and the state-owned Federal Electricity Commission from what he describes as years of neglect before he came to office in late 2018. He has threatened to seek constitutional change to ensure that his policies and legislation to boost the two companies remain in effect.
Finley’s claim is one of 13 against Mexico at ICSID, 10 of which have been filed since 2018.
Mexico’s treatment of private petroleum companies has also upset the top oil lobby in the United States. The American Petroleum Institute has sent at least two letters to the U.S. government asking it to urge the Mexican government to uphold its trade agreement commitments to treat American petroleum sector investors and exporters fairly.
Source: Reuters (en)