The president of Andrés Manuel López Obrador believes that the country’s energy sector regulators should participate in the “new policy” for the sector and join forces with the government to “recover the public domain” of the national oil and electricity industries.
MEXICO CITY (El Economista) – President Andres Manuel Lopez Obrador confirmed a change in the direction of the country’s energy policy. He does not even rule out presenting a constitutional reform initiative to the Congress of the Union to assert the principle of the nation’s dominance over natural resources, Therefore, in its administration contracts. The current legal framework will be respected. Private companies will be able to continue participating in the sector as contractors of Petróleos Mexicanos (Pemex) and the Federal Electricity Commission (CFE), will have access to a maximum of 46% of the national electricity generation.
In a memorandum signed in the Guillermo Prieto Hall of the National Palace last July 22, which was allegedly sent to workers of the Secretariat of Energy, the National Hydrocarbons Commission (CNH) and the Energy Regulatory Commission (CRE), the president stated that “it is urgent to deepen the changes already initiated to rescue Pemex and the CFE, considering these public companies as strategic and indispensable for the independent and superannuated development of the nation.”
“However, if to apply the new rescue policy to Pemex and the CFE it was necessary to propose a new energy reform, we do not rule out that possibility; that is to say, the option of presenting a constitutional reform initiative before the Congress of the Union must be kept open, among others, to assert, without a doubt, the principle of the nation’s dominion over its natural resources,” said the president in the document whose existence was confirmed by employees within one of the organizations.
Therefore, his proposal consists of returning, without ignoring the new realities, to the policy applied in his time by Presidents Lázaro Cárdenas del Río and Adolfo López Mateos.
In the document, the president reiterated that the more than 100 contracts for exploration and extraction of hydrocarbons assigned after the energy reform would be respected, but confirmed that no more would be tendered. Besides, Lopez Obrador said in the document that subsidies to private companies in the energy sector should be ended.
Therefore, public companies and regulators are committed to maintain the policy of not increasing gasoline, diesel, gas, and electricity in real terms.
Achieve energy self-sufficiency. Not to export oil, extract only what is needed for refineries, and stop importing diesel and gasoline.
Implement the following production programme: 1.8 million barrels of oil per day in 2020; 1.9 in 2021; 2.0 in 2022; 2.1 in 2023; and 2.2 in 2024.
Continue with the six refineries’ rehabilitation program to reach, in 2022, processing of 1.2 million barrels per day, as well as a finish that same year the Dos Bocas refinery, Tabasco, to add 340,000 barrels per day that year.
Define as soon as possible the convenience of building the new refinery train in Cangrejera to achieve fuel self-sufficiency before the end of the current government. This would imply processing 200,000 barrels per day, which would be adding value to 1.75 billion barrels per day of crude, with a reserve of 250 billion, according to production estimates for 2022.
As for the electricity industry, prioritize and opt for the most profitable: build or rebuild plants to meet the demand of the southeast, particularly the Yucatan Peninsula, as well as supply sufficient energy to Baja California Sur.
Strengthen the generation of electrical energy. Pemex and the CFE should recognize previously signed contracts as long as they do not imply fraud against the nation.
The granting of subsidies of any kind to private companies in the energy sector should be eliminated.
The national electricity system should be fed in this order: first, the energy produced in the hydroelectric plants should be uploaded to the distribution network; second, the energy generated in other CFE plants; third, the wind or solar energy of individuals and finally, the combined cycle energy of private companies.
The CFE should apply the plan for the use and sale of the gas acquired in the previous government, to avoid fines and exaggerated payments for this “bad public business done in the “neoliberal” period”.
The granting of permits or concessions in the energy sector to individuals for over-supply of oil and electricity should be stopped for the medium and long term.
Support Pemex and the CFE in the policy of energy distribution, to prevent them from losing participation in the national market.
Both in oil extraction and refining, as well as in power generation, the association with private investors will not be discarded as long as they are complementary actions that do not affect the national interest, so that the contracts of the rounds will be maintained and for the chemical and petrochemical industry, special activities will be allowed as long as they are not carried out with inputs from the nation or credits from the development bank, such as Pemex’s ethane in Ethylene XXI.
Banish corruption, influence, and impunity in Pemex and the CFE
“I clarify that everything we do must adhere to legal standards and under no circumstances alter the rule of law,” he concluded, asking officials to state whether it is possible to reach this new reality.
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