Dino Barajas, Steven Otillar Interviewed by MCC on LatAm Energy Markets

Akin Gump global project finance partner Dino Barajas and oil and gas partner Steven Otillar were interviewed by Metropolitan Corporate Counsel for its April issue, the resulting article titled “Latin America Power Drive: Projects abound as energy players near and far pitch for a piece of fast-changing markets.”

Barajas and Otillar, both experienced in Latin American energy markets, among others, discussed a wide range of related topics, including:

• The growth of Latin America’s renewables sector: “More than 53 percent of power in Latin America is generated by renewable energy sources. The worldwide average is 22 percent. [M]ost of that is hydro. When it comes to wind, solar and geothermal, Latin America has about 2 percent production, whereas the worldwide average is 6 percent. That means that there is still significant room for growth in a variety of renewable energy sources.” (Otillar)
• Impact of Trump administration policies on U.S./regional interdependence: “Although the current administration seems to have created friction in the media between some Latin American countries and the U.S., I think the relationships are going to continue to thrive, particularly between the U.S. and Mexico. We’re closely tied…With respect to Texas, depending on the source, 30 to 40 percent of natural gas prices are supported by exports to Mexico. Business ties such as these are too substantial to be completely eliminated overnight. Friction can, and will, delay project development; however, we continue to advise our clients on how to manage those inherent risks by taking a longer-term view and mitigating risks as much as possible from a contractual standpoint.” (Barajas)
• Areas of interest for development: “We’ve seen a lot of hydroelectric in Brazil, even when the market opened up for hydrocarbons in the mid-1990s. We have worked on run-of-river projects, but most renewable investment has been in solar and wind. But in terms of generating interest among operators, interestingly enough there’s been a movement away from tax incentives and things of that nature to incentivizing renewable power development without subsidies. Chile, Brazil, Mexico, Argentina – all focus more on auctions for renewable energy, where bidders submit the price at which they are willing to sell power. That has been very successful.” (Otillar)
• Mexico’s measures to incentivize energy investment: “Mexico, to its credit, has provided a very flexible investment environment to the private sector. Companies can go in by themselves and bid these projects, or do it in a joint venture with Pemex or another of the local players. That’s allowed foreign players that have been looking at the market for years to get very comfortable quickly. I don’t think anyone could have imagined that the market would have opened up as much as it has, and as quickly as it has. That’s historic, and something that other governments could look at.” (Barajas)

To read the full interview, please click here.