The energy reform promoted by Enrique Peña Nieto may suffer a setback if populist Andrés Manuel Lopez Obrador (known as AMLO) is elected president in the 2018 elections.
Lopez Obrador committed to reversing the energy reform, which ended more than seven decades of state monopoly on hydrocarbons, if he is elected president in 2018. And the polls indicate he is the favorite candidate to replace Peña Nieto.
In addition to putting an end to the process of opening the energy industry, AMLO committed to ending imports of cheap fuels, increasing production at local refineries, and strengthening state-owned oil company Pemex, according to Rocio Nahle, Lopez Obrador’s right hand.
In 2006, Lopez Obrador lost the elections by a mere one percent. Six years later, he lost by six percentile points to Peña Nieto, whose popularity has rapidly decreased in recent months.
Several recent polls place AMLO at the front of the presidential race, with 36 percent popularity ratings, according to the latest survey by newspaper El Universal.
Rocio Nahle, leader in Congress of Morena, Lopez Obrador’s new political party, and its head energy consultant, explained how AMLO plans to paralyze Peña Nieto’s oil opening policy.
Nahle said that if Lopez Obrador were to win he would immediately call for elections for a public consultation on whether oil companies should be allowed to develop projects independently, as Peña Nieto’s reform establishes.
AMLO will force Pemex to have a minimum participation in all future oil contracts and will try to revoke the two dozen contracts already signed with private companies.
“The contracts that are being signed are not supported by the Mexican people, and when you don’t have that support they are a risk,” affirmed Nahle.
The executive would directly assign lease contacts in new fields to Pemex, instead of calling for tenders, as the Peña Nieto reform establishes, indicated the Morena Party advisor.
Nahle stated there would be a “responsible opening” of the oil and gas sector in Mexico, and commended the joint venture between Pemex and Shell for the Deer Park refinery in Texas.
It is unlikely that Lopez Obrador manages to achieve the majority in Congress needed to repeal the energy reform, which is included in the Constitution, before being elected in 2018.
After the reform was approved, Lopez Obrador sent letters to the CEO’s or large international oil companies, including ExxonMobil and Chevron, warning them against signing new contracts in Mexico.
For the time being, out of the large companies in the sector only ENI was awarded one contract, but hopes are this circumstance may change after the deep-water bids, scheduled for December. For now, more than two dozen companies began the pre-qualification process, including BP and French Total.