Page 4 - LatAmOil Week 06 2021

LatAmOil COMMENTARY LatAmOil

(Photo: Pemex)
Is a trade dispute brewing

between the US and Mexico?

Lopez Obrador’s efforts to help CFE dominate the power sector have implications for oil and gas

MEXICAN President Andres Manuel Lopez agencies appear to be mostly amenable to fol-
Obrador has made no secret of his dissatisfac- lowing his lead.
WHAT: tion with the energy reforms enacted by his pre- In late January, the president went a step
Mexico’s presidential decessor Enrique Peña Nieto in 2013-2014. He further. Specifically, he submitted to the legis-
administration hopes to has said many times that he does not believe that lature a bill drafted by the Secretariat of Energy
secure approval for rules Mexico will benefit from these measures, which (SENER) that calls for giving CFE even more
that will benefit CFE. aim to break state-owned companies’ monopo- preferential treatment. Mexico’s Supreme
lies over the oil, gas and power sector. Court responded last week by ruling against
WHY: Thus far, however, he has refrained from the administration with respect to certain pro-
His efforts are part of trying to overturn the reforms outright, despite visions of the legislation. It explained by point-
a wider campaign to his own belief that preserving public-sector ing to the government’s plan to give CFE extra
secure extra advantages entities’ dominance is in Mexico’s best inter- advantages over privately owned renewable
for state-run companies, ests with respect to financial and operational energy operators, saying that these changes
including Pemex.
performance. As a result, private investors still would both inhibit competition and complicate
have opportunities to compete with Pemex, the efforts to reduce emissions.
WHAT NEXT: national oil company (NOC), and the Federal Although the draft legislation does not per-
Disagreements on this
front could lead to Electricity Commission (CFE), the national tain directly to Pemex, these recent develop-
debates about USMCA power provider. ments are likely to have implications for the oil
violations. Nevertheless, the windows of opportu- and gas sector. The president is still working to
nity have been narrowing. Lopez Obrador has secure passage of the bill favouring CFE, and
explicitly instructed his government to give he may very well succeed, since his National
CFE and Pemex the upper hand in the fuel Regeneration Movement (MORENA) party
and energy sector whenever possible, and state controls the legislature.

P4 www. NEWSBASE .com Week 06 11•February•2021