The American Petroleum Institute has called on the U.S. federal government to take note of Mexico's energy industry reforms as spearheaded by President Andres Manuel Lopez Obrador, saying recent changes to industry legislation are violations of Mexico's trade commitments and also that they undermine investor confidence.
Reuters cited a letter by the industry lobby to the federal government, in which it laid out its concerns about recent amendments voted by the Mexican parliament.
"The common denominator of both laws is to hinder new private investment in the energy sector as well as destroy the value of already operating private assets in violation of Mexico's commitments," the API said, referring to Mexico's commitments under the United States-Mexico-Canada Agreement.
The lower house of the Mexican parliament recently passed changes to an energy law that sought to boost the dominant position of Pemex on the domestic fuels market at the expense of private players.
The changes, if passed by the Senate, will give the Mexican government powers to restrict the activity of private companies in crude oil and fuel imports by revoking their permits if it deems their business activities threaten Mexico's economy and national security. Details about how this would be judged have not been included in the bill.
The proposed changes are part of a broader push by the Andres Manuel Lopez Obrador government to strengthen state control over energy markets. Earlier this year, the Supreme Court stopped another set of changes proposed by AMLO, this time regarding the electricity market, saying the changes would prioritize state-owned utility CFE over private companies, and that was unconstitutional.
Now, the American Petroleum Institute is insisting that what it calls violations of the United States-Mexico-Canada Agreement are included in the free trade commission meeting between U.S. Trade Representative Katherine Tai and Mexican Economy Minister Tatiana Clouthier.
By Charles Kennedy for Oilprice.com
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