Texas lawmakers call for White House intervention on Mexico’s energy policies

A bipartisan group of Texas lawmakers has called on the Biden administration to intervene on behalf of U.S. energy companies operating in Mexico amid the latter country’s increasingly nationalistic energy policies.

Senators John Cornyn and Ted Cruz, along with 18 of the state’s 32 U.S. officials, signed a letter to U.S. Ambassador to Mexico, Ken Salazar on Tuesday, October 19, expressing concern over “recent steps taken. by the Mexican administration to promote public enterprises (state-owned enterprises) and repel American investment.

Through a legislative overhaul proposal, Mexican President Andrés Manuel López Obrador seeks to overturn the provisions of Mexico’s historic 2013-2014 constitutional energy reform, as well as the existing private sector participation regimes in the electricity sector. since 1992.

The proposed changes, if adopted, would result in the demise of the upstream oil and gas regulator, the Comisión Nacional de Hidrocarburos (CNH) and the intermediate, downstream and electricity regulator, the Comisión Reguladora. de Energía (CRE). The operator of the Centro Nacional de Control de Energía (CENACE) electricity network would be absorbed by the state-owned electricity company Comisión Federal de Electricidad (CFE).

The law would require CFE to supply 54% of the country’s electricity, with private sector producers providing the rest.

In addition, it would ban self-supply contracts for large electricity consumers, effectively forcing them to purchase electricity from CFE.

The reforms “would increase state control over the electricity sector and severely limit private investment,” the signatories of the letter said.

Lawmakers also cited recent changes to Mexico’s hydrocarbons law, “which allows Mexican authorities to suspend and revoke key permits for private operations,” as well as the dispute over the exploitation of the water oil field. Zama Shallow between Houston-based Talos Energy Inc. and the Mexican state oil company Petróleos Mexicanos (Pemex).

These actions “violate the spirit and the letter” of the United States-Mexico-Canada Agreement (USMCA), the Texas delegation said, “and must be addressed.”

Lawmakers implored Salazar “to engage directly with senior Mexican government officials to ensure that U.S. energy companies are able to export goods fairly and can continue to drive private investment and the growth of employment throughout the region “.

Texas lawmakers aren’t the only ones citing López Obrador’s policies as violating the USMCA.

Talos management said last month that the company had filed notices of dispute with the Mexican government over the Sener Energy Department’s decision to grant Zama operation to Pemex, despite a consortium led by Talos made the discovery.

The Asociación Mexicana de Suministradores Calificados (AMSCA), or Mexican association of qualified suppliers, joined a chorus of business groups on Wednesday that spoke out against proposed changes in the electricity sector.

Qualified suppliers are electricity suppliers who compete with CFE on the wholesale electricity market under the 2013-2014 reform.

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The proposed reform, by canceling existing contracts and permits, would amount to expropriation, the group said.

In addition, it “would eliminate competition, and therefore the right of Mexicans to access competitive electricity prices,” AMSCA said.

Many professional groups have also expressed their opposition to the reform on environmental grounds.

The Asociación Mexicana de Energía Eólica (AMDEE) and Asociación Mexicana de Energía Solar (ASOLMEX) in a joint statement said the reform would amount to a de facto reversal of the energy transition in Mexico by canceling energy supply contracts. renewable energy sources and giving priority treatment to the CFE.

Against this background, the US President’s Special Climate Envoy John Kerry visited Mexico this week to observe Mexico’s Sembrando Vida tree-planting program and highlight the urgency of the climate crisis ahead of the 26th climate summit of the Conference of the Parties (COP26) in Glasgow in November. .

In a speech, Kerry made no mention of proposed reforms or the grievances of US energy companies doing business in Mexico.

“During the visit, President López Obrador shared his decision to begin a structured transition towards greening Mexico’s energy sector and strengthening its energy independence,” the countries said in a joint statement.

The statement added that Mexico plans to “cooperate closely with the United States to accelerate the deployment in Mexico of renewable energies, including wind, solar, geothermal and hydroelectric power, as a major step in Mexico’s commitment to strengthen the ambition of its nationally determined contribution under the Paris Agreement next year.

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