Page 5 - LatAmOil Week 03 2022

LatAmOil COMMENTARY LatAmOil

The closest thing to an upset was the decision initiative was designed to favour state-owned
in late November by the Committee on Foreign fossil fuel producers such as Pemex at the
Investment in the United States (CFIUS) to delay expense of the renewable energy industry.
the transfer of a 50.01% stake in the Deer Park “President Lopez Obrador’s policy agenda
refinery in Texas from Shell (UK) to Mexico’s prioritises carbon-intensive, polluting and
national oil company (NOC) Pemex for several more expensive energy sources simply because
weeks. (In the end, though, the delay was only the output is state-owned,” wrote Senators Bob
temporary, and the sale has now been finalised.) Menendez, Brian Schatz, Tim Kaine and Jeff
This week, though, Biden’s Secretary of Merkley, all members of Biden’s Democrat
Energy Jennifer Granholm publicly criticised Party. “It would also threaten at least $44bn in
the Mexican government’s energy policy. Dur- private investment in Mexico’s energy sector,
ing a meeting with Lopez Obrador in Mexico will negatively impact US private sector invest-
City, she expressed concern about the presiden- ment in Mexico and is antithetical to the histor-
tial administration’s bid to change the constitu- ically strong US-Mexico economic relationship.
tion to guarantee that a state-owned company, Co-operation with Mexico on clean energy
the Federal Electricity Commission (CFE), development, including the cultivation of crit-
dominates the national power market. (The ical minerals, is essential to advancing compe- Biden’s team
proposed constitutional amendment has been tition with China and to ensure cost-efficient is more likely
submitted to the Mexican legislature and will energy generation for the people of Mexico.”
come up for a vote in April.) to press Lopez
For renewables, but not O&G
Change of approach Going forward, then, it seems likely that Gra- Obrador on
Granholm’s critique does represent a shift in the nholm and other members of Biden’s team are
Biden administration’s approach to Mexican likely to press Lopez Obrador on matters of matters of energy
energy policy. It appears to indicate that Wash- energy policy when renewables are involved but policy when
ington is ready to speak up in favour of US inter- perhaps not as far as oil and gas are concerned.
ests, US investors and the kind of energy market In other words, for the current US admin- renewables are
access outlined in the US-Mexico-Canada istration, this isn’t just a matter of free trade in
Agreement (USMCA) signed by Trump in 2020 principle or about the provisions of the USMCA involved, but not
– but for renewable energy, not for oil and gas. that guarantee Mexico autonomy in the area of
Speaking with Mexican Foreign Minister domestic energy policy. It’s a matter of ensuring on oil and gas
Marcelo Ebrard after her meeting with Lopez that free trade and the USMCA are made to
Obrador, Granholm noted that the US gov- work in the service of the right kind of energy
ernment was worried that the proposed con- – which is, of course, renewable energy and not
stitutional amendment favouring CFE would fossil fuels.
prevent US companies from investing in renew- This is unfortunate for the US oil, gas and fuel
able energy projects. “Mexico has such an envi- companies that have been harmed by the cur-
able, an amazing series of clean resources that rent Mexican government’s approach to energy
we want to talk about. And like all friends, there policy, as they are likely to continue being side-
may be issues we’re also going to work on, on lined or paralysed by administrative measures
electricity reform,” she said. and permit delays. Lopez Obrador is now trying
In a post on Twitter, Ebrard quoted her as to introduce a constitutional amendment that
saying that US investors were keen on partici- would give Pemex the same type of privileges
pating in the “enormous opportunity for renew- that he wants to give CFE – and he may not do
able energy in North America.” so, given that he does not have a large enough
majority in the legislature to secure a win.
Under pressure However, he has promised that his govern-
Granholm was not speaking in a political ment will use every legal means within its power
vacuum. to give state-owned companies an edge in the
She travelled to Mexico City after four mem- energy sector, and there is no reason to disbe-
bers of the US Senate said in a letter to her and lieve him.
Secretary of State Antony Blinken that they were For US investors, then, there are likely to be
concerned that Lopez Obrador’s constitutional more battles ahead. ™

Granholm (L) met with Lopez Obrador (R) in Mexico City on January 20 (Photo: LopezObrador.org.mx)

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