Page 5 - LatAmOil Week 24 2021

COMMENTAR
LatAmOil COMMENTARY Y LatAmOil

It would hardly be surprising if he did, given that dice on behalf of state-controlled organisations.
he has been at least as protective of the national Earlier this month, for example, a federal
oil company (NOC) Pemex as he has been of court temporarily reinstated certain restrictions
CFE. Indeed, he has spoken repeatedly of his on Pemex that had been terminated by the pas-
desire to ensure that state-owned companies sage of a new law on the downstream fuel mar-
play the leading role in all parts of the fuel and ket. As a result, the NOC will have to resume
energy sector. the practice of submitting its wholesale pricing
Even if he does not, though, a push for a regime, product discount plans and commercial
constitutional amendment preserving the agreements to the Energy Regulatory Commis-
national power provider’s privileges will have sion (CRE) and of making most of the informa-
some impact on the gas business. After all, CFE tion public.
doesn’t just produce electricity; it also builds and This will put it back in line with the old law,
pays for natural gas pipelines in order to ensure which exempted privately owned companies
the flow of feedstock to its thermal power plants from these disclosure requirements in a bid to
(TPPs). encourage competition. Mexico’s
As such, the company is a key player in Mex- Judicial authorities may react similarly if the president is not
ico’s gas sector, and if it gains constitutional president mounts more legislative campaigns
protection for its dominant position, the govern- on behalf of Pemex, CFE and other state-owned likely to give
ment will of necessity gain great influence over companies.
the domestic gas market. If so, energy policy will become an unstable up on the idea
Moreover, even if Lopez Obrador fails to arena, dominated partly by the administration’s
secure the passage of the constitutional amend- efforts to secure the passage of draft laws in a set- of securing
ments he wants, he is not likely to give up on the ting where it can no longer count on the support advantages for
idea of securing advantages for CFE – or, for of a super-majority of legislators and partly by
that matter, for Pemex. Instead, he may very well the court system’s efforts to push back against state-owned
step up efforts to introduce legislation favouring new laws that are not in line with constitutional
state-owned energy companies. He might also safeguards for competition. energy companies
issue executive orders and/or give instructions This instability, in turn, could lend credence
to government agencies in a bid to give CFE to Lopez Obrador’s claims that he is being tar-
(and perhaps Pemex as well) as many advantages geted for his populist and anti-corruption
as possible. stance.
Whether such instability persists past the end
Back and forth of the current president’s term in 2024 depends
The problem with this approach is that it has the on who is elected to the position next. If another
potential to lead to a certain amount of turmoil. populist takes office, Mexico may be headed for
If the president’s campaign for a constitu- more wrangling over the future of the oil and gas
tional amendment favouring CFE turns into a sector. But if the election is won by a more mar-
stream of new draft laws and executive orders, ket-minded candidate, the country may have
Mexico’s federal court system is likely to weigh reason to be grateful that Lopez Obrador’s best
in on the matter. Lopez Obrador cannot count efforts did not dislodge the energy reform initia-
on a victory there, as the judicial system has a tives that Enrique Peña Nieto, the last president,
track record of blocking his moves to load the favoured. ™

(Photo: Fluor)

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