Opposition candidate Xóchitl Gálvez promises to shake up Mexico’s energy sector if she wins the elections in June.
Gálvez would respect the laws of competition as enshrined in the constitution, promote the domestic production of natural gas and renewable energy and work to develop a regional energy strategy, Rosanety Barrios, the head of her energy team, told NGI’s Mexico GPI in a podcast.
Barrios said the natural gas sector in Mexico needs more competition and a return to the open access transport model on its pipelines.
She added, “We need transparency and we need a lot of infrastructure.” The official plan published by the Gálvez team emphasizes developing pipelines to get gas to the peninsulas of Yucatan and Baja California. Another big infrastructure project would be developing underground natural gas storage within Mexico.
Recently, Mexico’s Comisión Federal de Electricidad (CFE) said it was seeking to develop a natural gas storage facility in Texas. CFE’s international marketing arm, CFE International, called it “essential to enhance energy security and efficiency in the operation of the Mexican electrical system.”
“I just can’t believe…that CFE International is starting a process in order to have storage in Texas,” Barrios said. She said that Winter Storm Uri in 2021, when natural gas prices skyrocketed and a supply squeeze left Mexico stranded, underlined the need for domestic storage. “It’s very dangerous for the country. We need storage.”
Barrios also underscored the need to develop Mexico’s vast natural gas resources. She suggested restoring the upstream bid rounds that were scrapped under the administration of President Andrés Manuel López Obrador. “We definitely need rounds in order to recover national production. So the gas rounds are something that we are considering very seriously.”
If Gálvez were to win, the state oil company Petróleos Mexicanos (Pemex) would be transformed into an energy company with a focus on profitability and sustainability.
Plants currently running on fuel oil would be switched to natural gas. “We want to have a totally new Pemex,” Barrios said. “We need to review the fiscal regime that applies to natural gas and this is something that we are evaluating.”
As for the development of liquefaction plants in Mexico sourcing U.S. gas, Barrios said Gálvez would take a pragmatic, North American approach to devising energy policy.
“At this moment, President Biden is not allowing the permits for an LNG plant in U.S. territory, but at the same time Mexico is writing these permits. It makes no sense… we need to have this regional energy policy to discuss what are the best ways that both countries can have…the highest benefits for both countries.”
Energy security, she added, would be enhanced by renewable energy, the domestic production of natural gas, along with natural gas storage facilities.
Gálvez is the candidate for the Frente Amplio por México coalition party comprised of the Partido Acción Nacional (PAN), Partido Revolucionario Institucional (PRI) and Partido de la Revolución Democrática (PRD).
In a recent poll, President Lopez Obrador’s pick, former Mexico City Mayor Claudia Sheinbaum, had a healthy lead over Gálvez with 52% of respondents saying they would vote for her. Only 33% of respondents said they would vote for Gálvez, but this was up from 30% in a prior poll.
Barrios said the main difference between the Gálvez plan and Sheinbaum’s plan is respect for laws and the constitution. She cited Sheinbaum and López Obrador’s goal to grant CFE 54% of the generation mix, which would require a constitutional amendment.
How can “a private investor invest in Mexico if they know that Claudia is going to change the constitution?” Legal certainty is “important for any kind of investment. So this is the main difference to me” in the two plans, Barrios said.
