PRESS RELEASE

Wood Mackenzie: Mexico's new president: energy future at a crossroads

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Monday, July 2, 2018

Press Release by

Wood Mackenzie

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After a contentious campaign, Andrés Manuel López Obrador has won the presidency. Now, the energy industry is trying to determine the incoming administration's strategic priorities and the implications for Mexico's energy reforms and its upstream, downstream, gas and power markets.

Commenting on the results of the election, Ixchel Castro, manager of Latin America oils and refining markets research with Wood Mackenzie, said: "With the election of a new president, Mexico is at the crossroad between continuity and change.

"While much remains unknown, one thing is clear: to deliver on his campaign promises, López Obrador will need an energy sector that generates revenue during his six-year term. This administration stands to reap the rewards of the reforms - increased production, private investment and job creation - but this will require strong backing from both the incoming administration and government coalition support.

"Therefore, we expect this new administration will recognise the need for future licensing and private investment throughout the energy value chain. And although energy reform implementation will likely slow, especially at the beginning of López Obrador's term, we expect it to largely remain on its current trajectory. Efforts to strengthen Pemex will benefit consumers if the administration continues to promote a more competitive market under the best international practices."

Ms Castro added: "Furthermore, although we expect a temporary halt to new rounds during the first year of the administration as the president fills key roles and resets priorities for the energy reform, the level of interest in recent rounds suggests that companies remain committed to Mexico and we anticipate foreign investment interest in the country to continue in the years ahead."