At a recent major Mexican oil and gas industry event, the first since the landslide election victory by President-Elect Andres Manuel Lopez Obrador, business leaders and officials emphasized their support for the upcoming administration but also shared their concerns about the election’s potential impact.
Many participants at the conference clearly harbored doubts about the future, according to analysts who mingled with attendees. In the days before the Mexico Oil & Gas Summit held earlier this month, Rocío Nahle, considered the leading contender to become energy secretary in the new administration, had already raised eyebrows by announcing she planned to appoint Alberto Montoya as her deputy.
Lopez-Obrador, aka AMLO, is set to take office on Dec. 1.
"I was really surprised” at the news of Montoya’s potential appointment, said consultant Luis Miguel Labardini, a partner in Mexico City-based Marcos y Asociados. “He's a very intelligent person. No doubt about that, but I had always regarded him as a hardline opponent of the energy reform."
Montoya, who has a doctorate from Stanford University in California, appeared in a video published this month on the website of Mexico City’s Reforma, which showed him as a defender of the ultranationalist oil policy of Venezuela.
The energy conference began on a positive note, with an address by Mexico’s Juan Carlos Zepeda, president of upstream regulator Comision Nacional de Hidrocarburos, or CNH. Zepeda, as he has on several occasions recently, emphasized the huge gap between the lofty ambitions of the state oil company, Petroleos Mexicanos (Pemex), and the resources that the government provides it.
Pemex is 100% state-owned and thus has strict limitations on access to private capital. China's state oil companies, by contrast, have a ready-made financial vehicle in the form of PetroChina Co. Ltd., which can raise the capital they need. Since it was founded 18 years ago, "PetroChina has become the world's third largest oil company," Zepeda said.
He said CNH has an abundance of information on which to supply interested companies. "Some $2 billion has been spent on exploration over the last three years. Four exploratory permits are either near to completion or have been completed,” with another 87,000 square meters acquired using 3-D wide azimuth seismic technology.
Also in the past three years, he said, CNH has acquired 332,000 square kilometers of 2-D seismic technology, three times as much as it had previously.
However, some representatives of the many of the companies now working in Mexico complained about excessive red tape, and worse, in their dealings in Mexico.
"You have to pay extortion money in order to work, and there's vandalism," said Petrolera Cárdenas Mora’s Roberto McLeod, general manager of the affiliate of Egypt-based Cheiron Holdings. "Surely the private companies can't be simply left to their own devices in terms of security. The government needs to play its part."
Other industry executives cited problems emerging with owners of the ejidos -- the collective land ownership scheme that has been in place for decades -- involving trade unions and crime.
EY’s Alfredo Álvarez, segment manager for the consultancy’s Latin America North, also moderated a panel on natural gas.
Atco’s Elie Atme, business development manager, emphasized that the upcoming administration will have to keep up the pace set by its predecessor.
"Mexico is undergoing a constant process of change, and the system has to be improved every step of the way," Atme said, in what appeared to be a pointed reference to the progress of the energy reform.
Comision Regulatoria de Energia (CRE) President Guillermo Garcia said one of the regulator’s contributions to the progress is a plan to bring better living conditions and access to a secure and cleaner source of energy to many of Mexico's poorest states, most of which are in the south of the country. An example, he said, would be in the state of Guerrero where Acapulco, once one of the world's most glamorous resorts, is now ringed by poverty and violence.
Cenagas chief David Madero, who manages the nation's natural gas transportation and storage network, accepted the challenge with enthusiasm.
"The energy reform contains provisions for what are known as 'social' pipelines," said Madero. These are to be built mainly through public funds, with the aim of providing social services and employment to areas in special need.
"So far, those provisions have not been used, but they should be of interest to a government with more of a social emphasis in its policies," Madero added, with what appeared more than a wink and a nudge to AMLO.