Economics: Clash of views on energy policy
Pemex’s performance in the coming months remains the determining factor for the future of Mexico’s economy. During the Energy Mexico 2020 Congress, specialists and sector representatives of the oil, gas, power and renewables industries conducted a thorough analysis of the state of both international energy industries and that of Mexico.
In matters of E&P, the event witnessed the same byzantine and unresolved debate regarding the activities and production volumes of private Mexican oil companies. On one hand, President López Obrador insists that such firms have failed to make good on the commitments they made when they were assigned exploration and exploitation opportunities during past bidding rounds, and for that reason there would be no more such rounds. On the other hand, the National Hydrocarbon Commission (CNH) and the firms belonging to the Mexican Association of Hydrocarbon Companies (Amexhi) presented a variety of indicators pointing at the success of the bidding round strategy. In contrast, Pemex’s output fell between 2018 and 2019, and although it stabilized during 2019 this was due mainly to a rise in two fields that are otherwise in decline; the progress in the 20 priority fields Pemex announced as part of its strategy to expand production has been slow.
In terms of gas, the outlook is particularly bleak. Mexico imports 69.2% of its natural gas consumption, and everything indicates that the uptrend will continue. There was also talk of the lack of progress to date in providing natural gas coverage, and the need to expand the transportation and distribution network.
The progress Mexico has made in its “energy transition” was the subject of various sessions. Generally speaking, the comments heard over and over again in various sessions dealt with the absence of leadership and guidance in matters of clean energy.
During the two sessions on refining, several factors were analyzed, among them, the excessive refining capacity globally. In that context, the feasibility and convenience of the new refinery of Dos Bocas became the object of much criticism.
One of the main conclusions was that a couple of years ago International Oil Companies (IOCs) were interested in investing in Mexico, and in maintaining a significant presence in the country. However, this is no longer the case: due to the definitions on some policies, and to uncertainty about others, Mexico has lost its appeal for these types of companies.
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