Mexico’s Obrador Steps Up Oil Nationalism Rhetoric

Not a week after Mexico hosted its latest oil auction, the frontrunner for the next presidency in Mexico, Andres Manuel Lopez Obrador, has stepped up his nationalist rhetoric, saying “We will revise all these contracts, we will not allow the oil, which is owned by the people and the nation, to go back into the hands of foreigners.”

Obrador, who is the candidate of the leftist MORENA party and a former mayor of Mexico City, has more than once warned that if he wins he would revise the current contracts that the Pena-Nieto government signs with international oil companies for the development of oil and gas blocks onshore and in the Gulf of Mexico.

At some point last year, Obrador had softened his rhetoric on the subject, but recently, after the second large-scale oil block tender since 2014, he reverted to the warnings that smack more than slightly of the natural resource nationalism that is emerging and blooming in many parts of the world.

For the government, that tender, which saw 19 out of 29 blocks find suitors, was the most successful one. Officials estimated that the 19 blocks could see some US$93 billion investments poured into them, after the successful bidders paid a combined US$500 million for the exploration rights. The country will also benefit from a 19-percent royalty rate.

Related: Maduro Proposes OPEC Cryptocurrency

Just a day later, Obrador his intention to review oil and gas contracts if he wins.

Calling the Wednesday tender “just a show, pure demagoguery,” he said, “The contracts that were signed are, more than anything else, for financial speculation, not for production, not to extract oil, not to develop the oil industry.”

Taken literally, Obrador’s words would mean that Pemex would have to return to its monopolistic position on the Mexican energy market, which didn’t do the nation’s oil and gas reserves much good for lack of sufficient means to undertake a large-scale exploration and production campaign.

Yet the energy reform of Pena-Nieto’s government has hit end consumers hard, with prices at the pump rising suddenly and sharply, causing widespread protests since the government had promised a gradual price rise.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:

• Oil Prices Ravaged By Financial Turmoil
• Will Rising Crude Inventories End The Rally?
• U.S. Considers Cutting Venezuelan Oil Imports