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Mexico's Presidential Election: The Implications For Texas' Energy Industry

Andres Manuel Lopez Obrador at a campaign rally in Mexico City. Lopez says that if he wins the Mexican presidency on July 1, he will review contracts awarded to foreign energy companies. That statement is triggering uncertainty about the future of foreign participation in Mexico's oil, gas & electricity markets. (photo: Lorne Matalon)

Mexico's presidential election is coming up in July and the outcome could have serious implications for Texas energy companies.

Lorne Matalon is reporting on the Mexican election and joined us to talk about the presidential race.

Right now, the leading candidate in Mexico's election is Andres Manuel Lopez Obrador, the former mayor of Mexico City. The ardent left-wing nationalist has been leading the polls in Mexico by double digits.

Matalon says Lopez Obrador is trying to show that he's different from the deeply unpopular PRI, the Institutional Revolutionary Party or Partido Revolucionario Institucional. "[Lopez Obrador] believes Mexico can be more independent by what he sees as domination by the United States," says Matalon. "AMLO has promise to run an austere government and to combat corruption."

Matalon also says U.S. President Donald Trump has become a player in the presidential race in Mexico.

"AMLO has positioned himself as a candidate that will stand up to Trump," says Matalon. "Analysts here tell me that President Trump has given a gift to the left in Mexico by slamming Mexicans repeatedly and, of course, promising that, as recently as two weeks ago, Mexico will indeed pay for an expanded border wall."

Texas energy companies began operating in Mexico in 2014, after Mexico agreed to allow foreign energy companies to operate inside the country for the first time since 1938.

Under Lopez Obrador, contracts awarded to these companies could come under renewed scrutiny. "He's not comfortable with them in short," says Matalon. "AMLO wants to strengthen PEMEX, that's a state institution, rather than focus on foreign participation in oil and gas."

Some in Mexico, however, aren't happy with Lopez Obrador's position.

"If they start reviewing everything, we are going to slow down, put more regulation, put more roadblocks, so things will continue happening but at significantly slower pace than what they need to happen," says Ignacio Quesada, a former CFO for PEMEX and current member of the board of International Frontier Resources, an early entrant into Mexico's energy reform.

"If we are moving at 10 kilometers, we should be moving at 60. But no, these guys are thinking of moving at two. That's the wrong direction in terms of simplifying the process."

Although Lopez Obrador has been leading in polls, Matalon says his victory isn't a guarantee.

"This is Mexico and there is the potential for surprises around every corner when it comes to electoral tabulation," says Matalon.

Lopez Obrador has twice been defeated as a presidential candidate, in 2006 and again in 2012. It is widely believed that Lopez won the 2006 election by a slight margin. He maintains to this day, as do many Mexicans, that he was the victim of vote manipulation in 2006 when Felipe Calderon was declared president by Mexico electoral commission.





Carlos Morales is Marfa Public Radio's News Director.