Mexico’s New President Plans Gas and Oil Spending Push
Andrés Manuel López Obrador, Mexico’s new president-elect, said July 27 his government will centre energy policy around four primary projects during his initial six-year administration.
His top objective echoes the same goal of the two administrations that preceded him.
“The first proposal consists of extracting oil and gas with urgency,” López Obrador, known as Amlo, announced in Mexico City. “Production has continued to fall, and if we don’t act with urgency, there will continue to be problems in the short and medium terms.”
López Obrador’s government will invest MXN175bn (US$9.5bn) next year to increase natural gas and oil production in the country and begin the road to “rescuing the energy sector,” he said. Mexico’s natural gas production declined to record lows last year and has continued to fall during the first six months of 2018, while imports from the US have hit record highs.
Without further investment and development, Mexico’s natural gas production is forecast to fall as much as 47% during the next four years, according to the National Natural Gas Control Centre, known as Cenagas. Mexico’s natural gas production is expected to average 1.7bn ft3/day this year, and could fall to as low as 900mn ft3/day by 2022 without a significant increase in investment, according to Cenagas. Given that national demand for natural gas is expected to be around 5bn ft3/day this year, nearly 70% of Mexico's requirements will need to be met by imports from the US.
López Obrador said an estimated MXN75bn (US$4bn) will be invested next year to explore for and drill new wells for oil and natural gas development. The country’s oil production has declined from 3.4mn b/d in 2004 to a current rate around 1.9mn b/d. López Obrador hopes to boost oil production to 2.5mn b/d during the first two years of his administration, he said.
Amlo’s other three goals for the energy industry include the reconfiguration and rehabilitation of the country’s six refineries to reduce US gasoline imports, the construction of a new refinery in Tabasco state, and increased power generation, primarily from hydroelectric sources.
“The energy sector will be rescued with urgency to avoid a more intense crisis in the future,” he said. “There will not be increases in gasoline prices, which will be aligned with inflation, while prices of natural gas, diesel and electricity will also be maintained during the next three years.”
During the Mexico City event, López Obrador named Manuel Bartlett, a former interior minister and senator, as the new CEO of CFE, the national electric utility that is responsible for overseeing most of the natural gas distribution and transportation in the country. It reported a losss of MXN40bn (US$2.1bn) in the first half this year.
López Obrador also named Rocío Nahle, a former Pemex employee and congresswoman, as his new energy secretary, while Octavio Romero will become the new CEO of Pemex.
López Obrador will take office on December 1.