Mexico’s López Obrador to suspend oil auctions for two years
MEXICO CITY — Mexican President-elect Andrés Manuel López Obrador will hold off auctioning any new oil blocks for at least two years and plans to modify laws to bolster the dominant role of state oil company Petróleos Mexicanos, according to two people with knowledge of the situation.
The incoming administration won’t propose changes to Mexico’s Constitution, which was amended in 2013 to allow for private investment in oil and gas, but will use its majority in Congress to tweak the hydrocarbons law, the people said.
Planned changes would let Pemex choose partners to develop reserves without needing the favorable opinion of oil regulators, allow the government to grant Pemex new oil blocks directly, and make Pemex the sole marketer of oil produced by private firms under production-sharing contracts.
The government would also raise the required national content, such as equipment and services, for oil companies that operate in Mexico, these people added. The measures could add uncertainty to oil investors as they would reduce the regulatory power of the National Hydrocarbons Commission, which was set up to oversee the newly opened oil sector and guarantee a level playing field for all companies.
An expanded version of this report appears on WSJ.com.
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