As the oil and gas community came together for the British Chamber’s flagship Energy Day #EnergyDay2017 event on Tuesday, participants expressed cautious optimism regarding the political risk posed by the 2018 elections. During the event, which was held under Chatham House Rules prohibiting the disclosure of the names of information sources, speakers and conference goers discussed the likelihood of Mexico’s Energy Reform being affected by a victory for the Movimiento de Regeneracion Nacional’s (MORENA) 2018 presidential candidate Andres Manuel Lopez Obrador.
The prevailing sentiment was that even if a future president wanted to modify the Energy Reform Law it would be politically and legally impossible. In this context, some speakers noted that the renegotiation of the North American Free Trade Agreement (NAFTA) could also be an opportunity to lock the reforms into a binding international treaty. However, authorities present at the conference expressed confidence that the Energy Reform process is not susceptible to reversal and that treaty modification would be unnecessary.
This feeling of cautious optimism regarding relations between private oil and gas sector companies and the Mexican government spilled into other areas such as regulation, with both authorities and companies observing that the energy sector is over-regulated, largely due to the newness of the reform law. Nonetheless, private sector players praised the openness of the authorities, particularly PEMEX, to collaborate while noting the need to bring Mexico’s energy regulation in closer alignment with international practices.
Also discussed was the need for the publication of clear guidelines for community consultation when assessing the social impact of energy projects. Speakers noted cases where the opposition of communities had led to sizeable losses, partially due to the lack of clear regulations. Participants noted the importance of tangible benefits for communities in Mexico as a condition for the creation of a wider and more stable base of political support for the Energy Reform.