Page 16 - LatAmOil Annual Review 2021

LatAmOil JULY LatAmOil

(Photo: TransTech Energy)

The consequences of

AMLO’s energy policy

The Mexican president’s efforts to ensure that state-owned companies dominate

the fuel and energy sector are putting pressure on downstream operators

SINCE taking office in 2018, Mexican Presi- that have invested in Mexican fuel and energy
dent Andres Manuel Lopez Obrador has been projects since 2013. On the upstream end, for
WHAT: working to ensure that state-owned organisa- example, it appears to have been a factor in the
Government inspectors tions such as Pemex, the national oil company government’s recent decision to transfer control
have reportedly idled a (NOC), and the Federal Electricity Commission of Zama, a large oilfield offshore Tabasco State,
number of fuel import (CFE), the national power provider, play the from US-based Talos Energy to Pemex. It has
terminals. leading roles in the energy sector. To this end, also led Mexico City to restrict investors’ access
he has repeatedly criticised the market-oriented to new oil and gas prospects by calling off licens-
WHY: energy reforms enacted by his predecessor Enri- ing rounds or postponing them indefinitely.
Mexico City is trying to que Peña Nieto, which were designed to expose But the disruption isn’t confined to upstream
shield state-owned com- Pemex and CFE to a certain level of competition operations. Mexico’s downstream sector is also
panies from competition. from privately owned companies. under pressure – and it has no easy way to move
So far, the president has not yet said defini- forward.
WHAT NEXT: tively whether he will try to repeal those meas-
If the inspection cam- ures through the adoption of a constitutional Inspections and shutdowns
paign disrupts too many amendment. He has demonstrated, though, As far as Lopez Obrador is concerned, the prob-
shipments, the country
could run short of fuel that he is willing to use administrative means to lem on the downstream end is that Peña Nieto’s
– and the government render the reforms ineffective. energy reforms needlessly eliminated Pemex’s
may try harder to protect This approach has already had a negative long-standing monopoly on fuel production,
Pemex. impact on some of the foreign companies imports and sales.

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