AMLO proposed to suspend oil licenses for reasons of national security

The President of Mexico on Friday proposed to temporarily suspend oil permits for national security reasons as part of an initiative to change the Hydrocarbons Law (LI), in the midst of a campaign to strengthen the hand of the state in the energy sector.

The document states that the measure aims to ensure the state’s capacity to ensure energy security and the stability of the local economy in the face of possible shortages and interruptions in the electricity supply. supply of hydrocarbons and petroleum products this could affect the stability of the country.

“We must promote an energy policy that allows the Federation to act effectively (…) by suspending the permits”, underlines the initiative of the president, Andrés Manuel López Obrador, sent to the Chamber of Deputies.

The text indicates that it is necessary to ensure that the Ministry of Energy (Sener) and the energy sector regulator, CRE, can suspend permits “When an imminent danger to national security, energy security or the national economy is anticipated”.

However, he did not detail the circumstances that would lead to the suspension of the permits and only indicates that both the Sener and the CRE must explain the reasons.

The project could have implications for multinational companies operating in Mexico, including Chevron, Shell, BP, Exxon and Repsol, among others, which entered the country’s fuel market after the deep energy reform carried out under the previous government.

NEW SUCCESS

This is the government’s most recent move to change regulations in the energy sector, following the recent reform of the Electricity Industry Law (LIE), promoted by López Obrador, but whose start-up has been suspended in court.

It is also the most recent challenge for the private sector, now in the hydrocarbons sector, after the changes of the LIE, which generated enormous dissatisfaction among investors, many of them are large Mexican companies, but also foreigners from Mexico’s trading partner countries.

<< The proposed reform of the law on hydrocarbons will have consequences VERY SERIOUS for the economy and confidence in the country, ”said Gabriela Siller, Director of Economic Analysis at Banco Base. “This would completely cancel investments in the sector,” he said.

López Obrador has taken as his government’s flag to bolster state-owned energy companies, the Pemex oil company and the CFE generator, and save them from the deplorable conditions he says they found themselves in after the energy reform he says it only served to promote private capital.

Now the president is pressuring private electricity companies to negotiate with the government in the hope that they can secure better terms and savings for the state in existing contracts.

The president’s initiative too proposes to sanction the smuggling of fuels which, according to the document, has increased in parallel with the liberalization of imports of hydrocarbons and petroleum products, on which Mexico is heavily dependent for both natural gas, gasoline and diesel.

The project proposes that the Sener and the CRE can revoke the permits when licensees use them for traffic, whether it be hydrocarbons, petroleum products or petrochemicals.

It also establishes revocation of permissions that do not meet the minimum storage requirement.

KEEP READING: