A plan announced by Mexico's President to re-route a pipeline under construction in order to go around indigenous lands has sparked concern among some in the industry regarding future energy projects.
BNN Bloomberg cites analysts as saying the plan could create a risky precedent for indigenous communities that are already protesting a number of pipeline projects. This has already led to a decline in investments.
President Andres Manuel Lopez Obrador announced the plan to re-route the pipeline last week. Currently under construction, the project managed by TC Energy (former TransCanada) will transport natural gas from Veracruz to Puebla and Hidalgo across 176 miles that include an area that is considered sacred by several local communities in the state of Puebla.
"Even if we have to pay, the gas pipeline will not go through the sacred hills," Lopez Obrador said, as quoted by Reuters, over the weekend, after a consultation with four local indigenous communities.
"They are trying to avoid any legal problems, and international controversies," Wood Mackenzie gas analyst Rodrigo Rosas told Bloomberg.
Indeed, anti-pipeline activism has turned into a trend in recent years. Indigenous communities in both the United States and Canada have been active in opposing several large-scale projects, including the Keystone XL pipeline, Dakota Access, and, in Canada, the Trans Mountain expansion.
However, not all agree that the re-routing of the Tuxpan-Tula pipeline in Mexico is a problem. In fact, some see it as good news.
A Natural Gas Intel article by Andrew Baker quoted a Mexico-based energy consultant who said the re-routing could actually speed up the completion of the pipeline. This will in turn allow several power plants in the region to switch from more expensive fuel oil to cheap gas.
"They [the Mexico state power utility CFE] need it to be done," Gonzalo Monroy said. "I think that it was actually a very pragmatic decision by López Obrador, saying if they have to pay extra for the rerouting, so be it."
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. More