Mexico - Oil Majors Fear Inevitable López Obrador Presidency

As Mr Andrés Manuel López Obrador, the left-wing nationalist of the Mexican Presidential Election is cruising to victory in the upcoming July 1st poll, several oil majors are getting increasingly worried as his party vowed that they would never let oil “fall back into the hands of foreigners.”

Although most companies who have made major investments in Mexico (like Royal Dutch Shell, BP, ExxonMobil and total) agree that it is unlikely the US’s southern neighbor would make a move similar to that of Venezuela, aka nationalize the oil companies present in the country, most agree that an Obrador Presidency would come with adapted terms for their companies.

Related coverage: https://thegoldwater.com/news/26688-Mexico-Second-Presidential-Debate-All-About-Trump-Memes-And-El-Bronco

But some radical voices on oil majors’ boards, are fearful that Mr López Obrador might still follow the example of Mr Lázaro Cárdenas (the WWII Mexican president who nationalized Mexico’s oil industry back in 1938) as the favorite for this year’s presidential election declared five years ago that “Mexico’s oil belongs to the people.”

<blockquote class="twitter-tweet" data-lang="en"><p lang="en" dir="ltr">If Lopez Obrador wins Mexico&#39;s July 1 election, his old-guard &quot;non-intervention&quot; foreign policy will be celebrated by Venezuela&#39;s dictatorship. See: <a href="https://t.co/2yI9gjDyFz">https://t.co/2yI9gjDyFz</a> <a href="https://twitter.com/MiamiHerald?ref_src=twsrc%5Etfw">@miamiherald</a> <a href="https://t.co/uKcPYdN4T2">pic.twitter.com/uKcPYdN4T2</a></p>&mdash; Andres Oppenheimer (@oppenheimera) <a href="https://twitter.com/oppenheimera/status/1000734800469217280?ref_src=twsrc%5Etfw">May 27, 2018</a></blockquote>

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In any case, it is not looking like a winning combination for many of the companies that have huge investments in Mexico.

<blockquote class="twitter-tweet" data-lang="en"><p lang="en" dir="ltr">“Lopez Obrador Says He Would Ask Peña to Halt New Oil Contracts”, <a href="https://twitter.com/markets?ref_src=twsrc%5Etfw">@markets</a> <a href="https://t.co/JUPPbLLzRG">https://t.co/JUPPbLLzRG</a></p>&mdash; Arturo Sarukhan (@Arturo_Sarukhan) <a href="https://twitter.com/Arturo_Sarukhan/status/975888058867384327?ref_src=twsrc%5Etfw">March 20, 2018</a></blockquote>

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Mr John Padilla of IPD Latin America, an energy consultancy, explained: “I expect that day one of an Amlo presidency will be something of a policy free for all. It’s not a fantastic scenario.”

Related coverage: https://thegoldwater.com/news/23881-Mexico-First-Presidential-Debate-Hears-Thieves-Hand-Chopping-Proposal

Mr Juan Carlos Zepeda, the country’s oil regulator who is supposed to make sure contacts with foreign companies are executed according to Mexican law, said: “If the new president wants to review the contracts, of course he can do what he wants. But he cannot change them. We are legally in charge. The contracts are safe.”

Furthermore, “no matter what political party you are from, it is really hard to say ‘no’ to billions of dollars.”

Source:

https://www.ft.com/content/16aeb5aa-5ece-11e8-ad91-e01af256df68