Politically. Politically, ROE Management is not very concerned with the upcoming election. They have spoken to Obrado’s team and they have indicated that if he gets elected it will be business pretty much as usual. The existing contracts will be reviewed, more or less for an understanding of what has been done, and there may be a lessening of activity for a period of time as the new government gets oriented and refocuses.
Roe’s Management view is that Obrado is a politician - he needs to say popular things to get elected. He is not as much of a socialist as he presents himself to be. The reality is, Pemex is broke. Pemex has very limited money for exploration, and they want to focus the little money they have on prime targets. Pemex has been paying a 70% royalty on all oil revenue to the government for years. Pemex is broke. The Mexican government is in dire need of funding.
The new government will need oil and oil revenue and it desperately needs the outside investment dollars.
Having that understanding is important. Pemex, however, wants to get as much done as possible before the new government takes over.
The upcoming election is having two big effects:
1. It has put extreme pressure on Pemex and on all government departments and agencies to get as many contracts completed as possible, the contracts migrated, new partnerships in place, new contracts in place, and all new auctions completed, before the upcoming election. ROE management said everything is now going flat out at break neck speed.
2. The second effect has been to scare off some of the potential bidders and competition. It Is scaring off the companies that have not been in Mexico and don't have a good understanding of Mexico, it's politics, or its potential.