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Oil and gas companies hoping to get a piece of the action in Mexico’s oil industry will have to make good on existing contracts first, Mexico’s president Andres Manuel Lopez Obrador said on Friday, according to Reuters.
Populist left-wing Obrador said on Friday there would be no new contracts for companies who are not investing and producing their other contracts in the country.
“If there’s no production, if they don’t invest, we can’t hand out contracts,” Obrador said at a news conference.
The hardline stance against oil and gas companies who have not yet acted on their current projects in the country is just the latest in a string of comments from the new president that have given analysts an unfavorable outlook on Mexico’s oil industry.
Shortly after Obrador took office, he vowed to put on review all oil and gas contracts that were forged with foreign oil and gas companies by the previous administration. No new contracts were to be had until this review.
Obrador has had a chilly response to foreign oil companies, and instead has coddled state-run oil company Pemex, in a nearly complete reversal of the previous administrations stance on opening up the country’s oil sector to foreign players in an effort to end the monopoly held by Pemex—the world’s most heavily indebted oil company--for decades. During this effective monopoly, Mexico’s oil production steadily declined.
Obrador has long blamed foreign oil companies for not stopping the production slide.
The most recent Pemex partner-seeking auction that was originally scheduled for October was canceled. The auction was supposed to find partners for Pemex for seven onshore oil and gas blocks. It was the third postponement of the auction.
Obrador has made significant promises to increase Mexico’s oil production to 2.5 million bpd.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.