Voter impatience threatens energy reform in Mexico

Feb. 26, 2018
For Mexico's energy renaissance, a worst-case scenario looms.

For Mexico's energy renaissance, a worst-case scenario looms.

All the main political parties have named presidential candidates for elections this July, and Former Mexico City Mayor Andres Manuel Lopez Obrador continues to lead in polls.

When Mexico in 2014 opened exploration and production to nonstate and foreign participation, Lopez Obrador opposed the enabling constitutional changes.

He sounded less obstructionist when he became an early candidate last year, saying he'd hold a referendum.

Lopez Obrador leads a party with the Spanish acronym Morena, comprising mainly former members of the leftist PRD.

Other leading candidates are Jose Antonio Meade of the party now in power, the PRI, and Ricardo Anaya of an alliance of the PRD and PAN, which governed during 2000-12, interrupting 70 years of PRI domination.

Meade is gaining support. But he might suffer from association with incumbent President Enrique Pena Nieto, who cannot run for reelection and who has lost popularity.

Part of Pena Nieto's problem is that he instigated energy reform.

Speakers at a recent event at Rice University's James Baker Institute said Mexicans have come to reject the initiative.

Lourdes Melgar, former Mexico undersecretary of energy now with the Massachusetts Institute of Technology's Center for Collective Intelligence, said, "Inside Mexico, it is seen as a completely failed energy reform."

She indicated the administration promised too much, too soon.

Yet more than 60 companies of all sizes, including more than 30 from Mexico, have entered the country's upstream industry since the first licensing round in July 2015, according to a Feb. 5 Oil & Gas Journal article by Ivan Sandrea.

The government has offered more than 90 licenses and awarded 70, reported Sandrea, chief executive officer of Sierra Oil & Gas, one of the licensees.

Especially during an oil-market slump, this hardly represents failed reform. Sure, problems exist. They're inevitable. But rewards will come.

At this stage in Mexican energy reform, no problem would be worse than a toxic brew of voter impatience and statist revanchism.

(From the subscription area of, posted Feb. 16, 2018; author's e-mail: [email protected])