Page 5 - LatAmOil Week 35 2021

LatAmOil COMMENTARY LatAmOil

Initially, Lopez Obrador said he would not seek In his state of the union speech, Lopez talked
approval for a constitutional amendment over- about changing the constitution to ensure that
turning the energy reforms passed during Peña CFE always had first priority in its own spheres
Nieto’s term. In June of this year, though, he indi- of operations. However, his newly appointed
cated that he had reconsidered the matter and Finance Minister Rogelio Ramirez de la O said
would not rule out pursuing this option. earlier this week that the government had no
The president has now signalled clearly that such plans for Pemex.
he favours an amendment and is ready to begin According to a report from Bloomberg,
drumming up support for this option. Earlier Ramirez de la O said it “would be a little late” to
this week, he said during his third annual state try passing an amendment restricting access to
of the union address that he intended to submit Mexico’s oil and gas sector. The state does want to
a formal proposal to Parliament before the end keep backing Pemex and will work closely with Even if Mexico’s
of September. the NOC, but it will not change the constitution current president
to bolster its ability to do so, he commented.
No amendment for Pemex “The government is in full position to keep would like his
This is not good news from a free-market per- supporting Pemex,” he said at an event spon-
spective. It signals that Lopez Obrador and his sored by Moody’s Investor Services. “But the predecessor’s
supporters remain determined to keep the gov- government will also “get closer to Pemex to give energy reforms
ernment at the head of Mexico’s energy sector, them more feedback for things that are neces-
regardless of how competition might benefit the sary to do and necessary to reorder, and we’re to go away, he
country’s economy. However, it is not necessar- working on that.”
ily a sign of impending doom for every compo- may not be able
nent of Peña Nieto’s energy reforms. More challenges ahead
First, the president may not have an easy time For now, then, Peña Nieto’s reforms will remain to secure the
securing passage for the proposed amendment. in place to some extent. political support
His own political party, Morena, does not have Even if Lopez Obrador would like them to go
a majority in Parliament; instead, it is the leader away, he may not be able to secure the political needed to make
of a multi-party coalition. That coalition once support needed to make that happen. And even
held a super-majority of seats in both chambers if he has the political backing he needs, he may that happen
of the legislature, but it lost ground in the mid- not be able to escape the notice of Mexico’s court
term elections held earlier this year and now system.
falls short of the two-thirds majority needed to Nevertheless, the reforms – and the com-
approve changes to the constitution. petitive arrangements they were designed to
In short, the changes Lopez Obrador is seek- promote – will still face serious challenges. The
ing may not have the votes needed to become president believes strongly that the energy sec-
law. And even if they do, a constitutional amend- tor ought to be led by the government, and he’s
ment along the lines favoured by the president shown that he’s willing to work within the letter
would probably draw objections from Mexico’s of the law to secure advantages for Pemex and
Supreme Court, which been sharply critical CFE. As such, foreign and private investors in
of (and willing to block) efforts to guard state- Mexico’s oil and gas sector ought to expect more
run companies such as CFE and Pemex from interference from Lopez Obrador’s government
competition. over the next three years, even if Pemex never
Second, the proposed amendment has its obtains protection in the form of a constitutional
limits. That is, it apparently would cover the amendment. ™
national power provider but not the NOC.

Week 35 02•September•2021 www. NEWSBASE .com P5