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The lower house of the Mexican Congress passed changes to an energy law that gives the government power to restrict private oil companies' activity in oil and fuel imports, Reuters has reported, adding the matter has now been passed to the Senate to vote on the changes.
MPs voted in favor of the changes despite warnings from Mexico's antitrust regulator, COFECE, that they would have a negative effect on competition on the domestic oil market and could make fuels pricier for end-consumers.
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.
If Senate passes the oil market changes, it will give the government powers to revoke private companies' permits to import and market oil and fuels if, for example, they are deemed to threaten the Mexican economy and national security, according to the Reuters report.
An earlier report on the matter by Reuters said the changes would affect both local and foreign companies active on the Mexican fuel market, noting that the proposal did not list the circumstances under which import and sale permits could be revoked, only saying that such a move would be considered "when an imminent danger is foreseen for national security, energy security or for the national economy."
Last year, as part of efforts to return control of the energy industry to the state's hand, the AMLO government also drafted an infrastructure plan that, according to the head of the country's oil industry association, would close the door to foreign oil companies willing to work in Mexico's hydrocarbons industry.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.