Photo: Rebecca Blackwell, STF / Associated Press
Nothing is certain in the wake of Sunday’s landslide election in Mexico, analysts and experts say, particularly the approach president-elect Andrés Manuel López Obrador will take towards the reforms that have opened the energy sector to foreign companies.
The president-elect campaigned on promises to roll back parts of the 2013 reforms by suspending new foreign investments in the country’s oil and gas resources and essentially resume state control of their development. But he more recently offered assurance that existing contracts with international companies will remain in place, providing giving outside energy companies cautious optimism that some $200 billion in new investments since the reforms will proceed as planned.
“His rhetoric did evolve over the course of the campaign,” said David Goldwyn, chairman of the Atlantic Council’s Global Energy Center advisory group. “He has moderated quite a bit.”
Now, with the elections decided, analysts expect incremental changes as López Obrador determines how to strengthen Petroleos Mexicanos, or Pemex, Mexico’s state-owned energy company while developing the country’s energy resources and preserving its access to low-cost natural gas from U.S. producers.
In 2013 and 2014, Mexico opened its energy market to foreign investment for the first time in more than 70 years and pledged to rely more on cleaner-burning fuel sources such as natural gas. It looked to the U.S. and agreed to expand its pipeline network to import natural gas for less money than it cost to produce in Mexico.
Ixchel Castro, a Latin American oils and refining markets analyst with research firm Wood Mackenzie, wrote in an analysis that the new administration could stand to benefit from the objectives of the reforms, namely increased production, private investment and job creation. For that reason, she wrote, it will likely remain open to future foreign investment.
“Although energy reform implementation will likely slow, especially at the beginning of López Obrador’s term, we expect it to largely remain on its current trajectory,” she said.
Pemex CEO Carlos Treviño told the Chronicle earlier this year that he does not expect a wholesale overhaul of the nation’s energy policies, noting that the reforms were written into the Mexican Constitution and would therefore be difficult to reverse.
“The contracts we have signed are going to be impossible to cancel or reject,” he said. “We also have a better arrangement in our corporate governance than we had four or five years ago.”