AMLO says Canadian pipeline contracts were ‘abusive’

MEXICO CITY — On Thursday June 27th, Mexico’s president Andrés Manuel Lopez Obrador, pushed backed against Canadian concerns that gas pipeline contracts awarded under his predecessor’s government might not be honored, saying the terms of the agreements were ‘abusive’ towards the state.

Mexican state power utility CFE said on Tuesday June 26, it would seek to negotiate a “fairer” resolution to contractual disputes over pipelines being built by companies including Mexico’s IEnova and Canada’s TC Energy.

The Canadian ambassador to Mexico, Pierre Alarie, wrote on Twitter on Wednesday that the Mexican government appears “not to wish to respect natural gas pipeline contracts,” and said he was “deeply concerned” over the signal being sent.

Lopez Obrador, who in February vowed the contracts would be honored, said he understood why Alarie was defending Canada’s interests, but struck a defiant tone when asked about the dispute during his regular morning press conference.

“Here it was stated that those contracts were abusive. I called them unfair contracts because they were handed over with all the benefits for the companies,” the president said.

IEnova, a unit of U.S.-based Sempra Energy, says the CFE is seeking arbitration over the terms of a contract the Mexican firm had signed in partnership with TC Energy to build a pipeline from Texas to the Mexican Gulf coast port of Tuxpan.

News of the arbitration request pushed IEnova’s shares down by more than 4% on Wednesday. The company’s stock fell by more than 8% in morning trading on Thursday.

Separately, Mexico’s Grupo Carso, a firm controlled by billionaire Carlos Slim, which is among the companies involved in the pipeline disputes, said in a statement it would analyze an arbitration request it had received from the CFE.

(Reporting by Dave Graham and Diego Ore Editing by Paul Simao for REUTERS)

Source: REUTERS