Some Thoughts It is possible that the OPEC and related meetings this week may delay again the announcements of the new energy policies and the new projects as there may have to be some adjustments to their policies based on what is agreed to at the OPEC meetings.
Private industry proposed 192 projects U.S.$92.3 Billion worth of new projects in the energy sector. It would appear that the Government is ready (almost ready) to announce U.S $ 13.4 billion worth of these new projects. This will likely be on the order of about 27-30 projects. It is unlikely that this is the whole list that will be approved over the next few months. As Nahle said in her press conference according to the New York Times Article, ” Nahle described this week's plan as "phase one" of the government's energy investment plan, and she appeared to leave the door ajar for new joint venture tie-ups with Pemex, which so far Lopez Obrado has resisted."Pemex, as a company, will decide if that is in its interests or not," she said.”
The Government is under great pressure to announce a stimulus package and one good way of doing this is to use other people's money. So now is a good time to do the first announcement.
$13.4 billion is about the equivalent to 6.0% of Mexico’s total government budget in 2019. The proposed U.S. $ 92.3 billion would have been equivalent to 40% of the Government’s national budget in 2019.
I would expect we will see at least another couple of rounds of announcements. It can take a long time, to analyze all of the proposed projects and to see how they fit into the National (AMLO’s) plan. As business analysts know, this is not a quick process. The government has to consider the overall government policy and plan, how the project fits within the new energy plan that has just been developed, how it impacts the environment, the landowners, the infrastructure required, the royalty and tax benefits to the Government, the benefit to Pemex, the strength and ability of the private business interests bringing the plans forward, along with the technology required and being learned in the process. ROE’s project should be one that meets all of the criteria but it is hard to know as the Government has not released its new energy plan.
Nahle said it will be up to Pemex to decide if a proposed joint venture is in its interests or not. However, Nahle is the Head of the Board of Directors of Pemex, so she is part of the decision making of what is in Pemex best interests.
Since ROE already has worked out an agreement with Pemex, and since Lukoil is a big player I am hoping they are on the first list. However, once the shift to Pemex partnerships occurs with the new government energy plans, then, even if ROE is not on the first list, it will be open for ROE to be able to immediately lobby for their project to go ahead. Since Mexico wants the price war to end and has offered to broker the deal, it may be in Mexico’s interest to approve projects involving Lukoil. But who knows, this Is Mexico and AMLO. As the one news article said, and as we know, nothing moves in Mexico unless AMLO says yes.