Will the renegotiated North American Free Trade Agreement (now called the US-Mexico-Canada Agreement) help or hamper oil and gas development in Mexico? That will depend on the direction Andres Manuel Lopez Obrador’s administration moves once he becomes president on Dec. 1.
Amlo, as the president-elect is known, advocated a return to tighter resource management policies early in his campaign. But he reportedly has assured several multinational oil companies that their development contracts awarded during the presidency of his predecessor, Enrique Pena Nieto, will be honored.
But the USMCA leaves Mexico’s incoming president plenty of room to maneuver. Its eighth article specifically recognizes the Mexican government’s “Direct, Inalienable, and Imprescriptible Ownership of Hydrocarbons” within the country and off its shores.
The agreement still requires US congressional approval before it becomes final. President Donald Trump said on Oct. 1 that he expected to sign the renegotiated agreement and send it to federal lawmakers within 60 days.
There were some positive signals from below the border a few days earlier during the 13th annual Mexican Oil Conference in Acapulco. Carlos Trevino Medina, chief executive of national oil company Petroleos Mexicanos, said during a Sept. 27 panel discussion that national energy policy reforms enacted in 2013 are beginning to yield important benefits.
“I believe that the Energy Reform has, without any doubt, proven to be a great reform, and I hope that it will continue to bring great benefits to Mexico,” he declared.
Another panelist – Steve Pastor, president of operations at BHP Billiton – said that the new framework makes it possible for foreign partners to work with Pemex and realize greater benefits than if they had tried to go it alone because of the national oil company’s knowledge of domestic resources as well as policies.
Recent tenders’ benefits
Earlier, Mexican Energy Sec. Pedro Joaquin Coldwell said that the recent completion of nine oil tenders to explore for oil and gas could generate about $164 billion of investments, with an average 74% profit for the state.
He predicted that by 2020, Mexico will be producing an additional 180,000 b/d, a figure that could increase to 430,000 b/d more in 2024 and reach an 816,000 b/d increase by 2030. One of every four barrels produced at that time could come from one of the 107 areas which were awarded recently, Coldwell added.
He said that the 2013 energy reforms already have helped attract $179 billion of investments in exploration and extraction, seismic and surface reconnaissance, gas pipelines and petroleum storage projects. This has strengthened Mexico’s energy security and encouraged regional oil and gas development with its attendant jobs and taxes for state and local governments, Coldwell said.