Will Mexico’s Election Affect its Energy Sector
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This Q&A was originally published in the September 29, 2017 edition of the Inter-American Dialogue’s weekly Energy Advisory
Q: Andrés Manuel López Obrador, widely known as AMLO, said Sept. 5 in Washington that if elected Mexico’s president, he would review the oil contracts that were signed after the country’s historic oil-sector reforms, adding that he did not trust those who had agreed to the deals on the country’s behalf. Should companies hold off on investing in Mexico’s energy sector until after next year’s presidential elections? What risks are outside investors facing in the run-up to the election, and what protections exist for investors if AMLO or another presidential candidate with similar views about the energy sector is elected? How likely is AMLO to reverse Mexico’s energy reforms if he becomes president?
A: Remi Piet, senior director at Americas Market Intelligence: “AMLO’s promise to revisit the energy-industry opening and contracts should be taken with distance. Such comments are part of his campaign effort to rally his supporters ahead of next year’s elections. His recent declarations were more aimed at underlining potential corruption or arbitrary decisions, rather than a frontal attack on foreign investments. He also confirmed private investments would be needed to reverse declining production and modernize refining capacity. As mayor of Mexico City, AMLO turned out to be more business friendly than initially feared. Moreover, the current Mexican administration seeks to include energy in the current NAFTA…
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