Mexico’s President Could Reverse Energy Reform

Mexico’s leftist populist President Andrés Manuel López Obrador said on Thursday that he might reverse the energy reform from 2013 if he can’t save state oil firm Pemex with existing laws, Reuters quoted the president as saying at a news conference.

López Obrador has repeatedly criticized the energy reform of his predecessor Enrique Peña Nieto, who opened in 2013 Mexico’s oil and gas sector to private investment for the first time in seven decades.

López Obrador plans to make heavily-indebted state oil firm Pemex the pillar of turnaround for the country’s declining oil production, but the oil price crash earlier this year further deteriorated the finances and the debt of the Mexican oil company.

The president seeks a greater role for Pemex in reversing the downward trend in Mexican oil production and is criticizing the energy reform and the foreign oil firms for failing to do so.

Earlier this week, Reuters reported, citing unnamed sources in the know, that Mexico could delay its planned energy sector reform until next year after López Obrador asked regulators this week to help prop up Pemex.

According to the sources, López Obrador asked regulators to suspend the issuance of new permits for private companies to reduce competition against Pemex as well as state power utility CFE. In addition, the President also said he planned to refinance Pemex’s debt, which is the largest in the global oil industry.

Reports emerged earlier this month that the López Obrador government planned to cut the access of foreign oil companies to Mexico’s fields. The stipulation was expected to be made in a new infrastructure plan that was to be released later. This countered earlier media reports that Pemex was looking to farm out some fields to foreign partners, with the head of the energy regulator, Rogelio Hernandez, saying that the company was actively looking for such partners.

By Tsvetana Paraskova for Oilprice.com