Page 5 - LatAmOil Week 03 2021

LatAmOil COMMENTARY LatAmOil

Lopez Obrador is not currently in a position Competing perspectives
to eliminate the laws in question, which were None of the letters referenced above drew much
introduced by his predecessor, Enrique Peña in the way of response from Trump. This cha-
Nieto, as part of a wide-ranging energy reform grined industry executives and legislators repre-
programme in 2013-2014. But he has indicated senting oil- and gas-rich US states, but it wasn’t
that he would like to roll back the reforms. And necessarily surprising. After all, the former pres-
as noted above, he has also taken steps to blunt ident got along rather well with Lopez Obrador.
their impact. The relationship between the two was good, per-
haps in part because of the former’s decision to
US concerns make a concession in order to secure the latter’s
His actions have not gone unnoticed. pledge to sign USCMA.
Last June, an industry group, the American That concession was outlined in Chapter 8
Petroleum Institute (API), voiced its concerns in of the new trade agreement. It stated that both
a letter to then-Secretary of State Mike Pompeo the US and Canada recognised Mexico’s right
and several other cabinet officials. In that letter, to establish its own energy policy through con-
API’s executive president, Michael Sommers, stitutional reforms and new legislation. But it
said that Mexican authorities had taken actions also stated that Washington and Ottawa were
that served to “discriminate against US inves- extending this recognition “without prejudice In the near term,
tors, in violation of commitments that Mexico to their rights and remedies” under USMCA.
agreed to in both NAFTA [the North Ameri- According to Lopez Obrador, then, the US oil and gas
can Free Trade Agreement signed in 1994] and criticisms of current trends in Mexican energy
USCMA.” To support this assertion, he noted policy have mostly consisted of wilful misunder- interests in
that API members in Mexico had complained standings premised on the assumption that US
about long delays in the permitting process and oil and gas companies have the right to prefer- Mexico are likely
stricter enforcement of quality standards that ential treatment in other countries. On the US to be a relatively
seemed not to affect state-owned entities such side, however, there is concern that Mexico is
as Pemex. wilfully putting itself in a position of being una- low priority for
Then in October, 43 members of the US ble to uphold its commitments under USMCA
Congress said in a letter to then-President by taking this approach to domestic policy. President Biden
Donald Trump that Lopez Obrador’s energy
policies contravened provisions of the United Expectations and priorities
States-Mexico-Canada Agreement (USMCA), As noted above, these competing perspectives
the new bilateral trade deal signed last year. They did not lead to much in the way of concrete
described the president’s policy course as “a pat- action under the Trump administration.
tern of obstruction” that could harm US energy As such, Biden, who has been so critical of
companies working in Mexico. Additionally, Trump, is now expected in some quarters to
they expressed interest in preserving Peña Nie- take a different tack and work more diligently
to’s energy reforms, which promote competition to support US oil and gas operators investing in
in the oil and gas sector. Mexico. It remains to be seen, though, whether
And on January 11, Pompeo and other cabi- those expectations are realised.
net officials sent a letter to their counterparts in In the near term, Biden is likely to be focused
the Mexican government, saying they remained mostly on urgent domestic issues, such as efforts
concerned about US oil and gas interests. “We to mitigate the damage that the coronavirus
have been concerned by reports of a July 22 (COVID-19) pandemic has done to the US
memo, followed by a September 22 meeting economy and public health. As such, US fossil
with regulators who were allegedly instructed fuel interests in Mexico are likely to be a much
to block permits for private-sector energy pro- lower priority – unless an unanticipated event
jects and to exercise their regulatory authority brings trade issues to the forefront.
to favour state-owned energy companies,” they And even in that case, the new adminis-
wrote. “If true, this would be deeply troubling tration’s climate policy may raise questions in
and raise concerns regarding Mexico’s commit- Washington about whether to go to the aid of oil
ments under the USMCA.” and gas operators. ™

A different US president, a different kind of relationship (Photo: Terceravia.mx)

Week 03 21•January•2021 www. NEWSBASE .com P5