Page 6 - NorthAmOil Week 04 2021

NorthAmOil COMMENTARY NorthAmOil

Sore spots in US-Mexico

energy relations

US President Joe Biden took office in the face of US

concerns about competition in Mexico – and a Mexican

leader’s determination to uphold his own preference for
state-owned companies

US-MEXICO ON his first day in office, incoming US Presi-
dent Joe Biden signed executive orders cancel-
WHAT: ling the permit that his predecessor issued for
Biden is expected in the Keystone XL oil pipeline and recommitting
some quarters to defend Washington to the Paris Agreement on climate
US oil and gas interests change. Then this week he placed a moratorium
more vigorously than his on the issuance of new leases for federal lands
predecessor. and waters for the purpose of fossil fuel extrac-
tion. (See previous story) According to press
WHY: reports and the Biden campaign’s previous state-
Trump is perceived to ments, more executive orders along similar lines
have looked the other are expected to follow in the near future, in line
way while Lopez Obrador with the new president’s position on environ-
favoured Pemex and mental issues.
discouraged competition. In other words, these policy decisions are not
exactly coming out of the blue. It seems reason-
WHAT NEXT: able to conclude, then, that Biden is not inclined Mexican President
Biden is likely to be more to favour the fossil fuel industry. introduced by his predecessor, Enrique Peña Andres Manuel Lopez
focused on domestic Nevertheless, there may be some limits to this Nieto, as part of a wide-ranging energy reform Obrador has favoured
priorities in the near lack of favour. Industry observers are expecting programme in 2013-14. But he has indicated state-owned Pemex
term. the new administration to champion the inter- that he would like to roll back the reforms. And and discouraged
ests of US oil and gas companies in other arenas as noted above, he has also taken steps to blunt competition.
– namely, in Mexico. their impact.
Presidential priorities US concerns
Those interests are currently at risk because of His actions have not gone unnoticed.
the stances taken by Mexico’s President Andres Last June, an industry group, the American
Manuel Lopez Obrador. Petroleum Institute (API), voiced its concerns in
The Mexican leader has in recent months a letter to then-Secretary of State Mike Pompeo
directed his administration to take every step and several other cabinet officials. In that letter,
possible within the bounds of law to ensure that API’s executive president, Michael Sommers,
Pemex, the national oil company (NOC), retains said that Mexican authorities had taken actions
its leading position within the domestic hydro- that served to “discriminate against US inves-
carbon industry. In so doing, he has upheld his tors, in violation of commitments that Mexico
own preferences for state-owned enterprises, agreed to in both NAFTA [the North Ameri-
which he sees as the natural and rightful leaders can Free Trade Agreement signed in 1994] and
of the country’s energy sector. But he has also USCMA.” To support this assertion, he noted
run up against the body of law that encourages that API members in Mexico had complained
competition and creates openings for private about long delays in the permitting process and
Mexican firms and international oil companies stricter enforcement of quality standards that
(IOCs) to invest in upstream, midstream and seemed not to affect state-owned entities such
downstream projects. as Pemex.
Lopez Obrador is not currently in a position Then in October, 43 members of the US
to eliminate the laws in question, which were Congress said in a letter to then-President

P6 www. NEWSBASE .com Week 04 28•January•2021