AMLO Goes Against Fracking in Constitutional Reforms

President Andrés Manuel López Obrador's proposal for constitutional reforms encompasses significant changes in the energy sector, sparking debates on energy policies and regulatory frameworks. Among the 20 reforms submitted to Congress, three aim to curb activity in the energy sector. These proposals include restricting the State electricity company from entering contracts with private firms, prohibiting hydraulic fracturing for natural gas extraction, and ceasing new open-pit mining concessions.

The first initiative seeks amendments to constitutional articles concerning strategic State industries, aiming to remove references forcing CFE to operate "based on best practices" and eliminating the State's ability to contract with private entities. Additionally, it proposes classifying internet services provided by the State as strategic, akin to postal services, telegraphs, and energy generation. This follows a recent Supreme Court ruling deeming a 2021 electricity industry law reform (LIE) unconstitutional.

The Supreme Court granted amparos to six companies against changes to the LIE. Yet, Justice Laynez's ruling faced delays due to legal challenges filed by the Federal Executive. Justice Laynez recommended granting protective orders to companies against the Electric Power Industry Law reforms, with a vote scheduled for Sep. 27. In his conclusions, he asserted that the economic authority vested in the State has constitutional limits, which the contested reform fails to respect. Additionally, he argued that neither ensuring dispatch security nor strengthening the CFE should override considerations of energy efficiency.

Another proposal involves restructuring energy regulatory bodies, advocating for the absorption of CRE’s and CNH’s functions by the Ministry of Energy, through changes to Art. 28 of the Constitution. This move aims to streamline regulatory oversight and consolidate decision-making authority within a single entity, aligning with the 2013 energy reform. 

The initiative also proposes the elimination of the Federal Telecommunications Institute (IFT), the Federal Economic Competition Commission (COFECE), the National Institute for Transparency, Access to Information, and Personal Data Protection (INAI), and the National System for Continuous Improvement of Education. It argues that from their establishment until 2024, these organizations have been allocated a total of MX$32.3 billion (US$1.8 billion), with most experiencing an annual increase in their budgets.

"To provide a clear perspective of the issue, the total budget allocated to the aforementioned organizations from 2018 to 2024 is equivalent to 5,385,591 Bimonthly Pensions for the Well-Being of Older Adults," it indicates.

The proposal also suggests banning transgenic maize cultivation nationwide, prohibiting hydraulic fracturing for hydrocarbon extraction, and limiting open-pit mining activities. López Obrador emphasizes the need to protect the environment and public health, while asserting national sovereignty over natural resources. However, these measures have raised concerns, particularly regarding their impact on international trade agreements, notably USMCA. Nevertheless, the document presented by the government indicates that the changes do not violate Mexico's obligations established under USMCA, as it continues to ensure free competition and participation in the broadcasting and telecommunications sectors.

The Mexican Council for Energy (COMENER), however, advocates for the development of unconventional reserves in Mexico to boost gas production, expedite the energy transition, and attain energy independence. Juan Acra, President, COMENER, highlighted Mexico's significant shale oil and gas resources, underscoring the need for their exploration and exploitation, which often involves hydraulic fracturing or fracking.

"Mexico ranks among the Top 10 countries globally with abundant technically recoverable shale oil and gas resources," Acra stated. Exploring these deposits presents a considerable opportunity for Mexico, akin to the United States' transition from being a hydrocarbon importer to an exporter.

Fracking, a technology for drilling and well stimulation, has been pivotal in unlocking unconventional hydrocarbon reservoirs. This method entails injecting high-pressure water, proppants, and chemicals to create fractures, enabling the extraction of gas and oil from deep underground. Fracking has revolutionized global energy markets, leading to enhanced production and energy self-sufficiency.

Acra highlighted the benefits of expanding the fracking industry in Mexico, including meeting growing hydrocarbon demands, job creation, reducing import dependence, and facilitating the transition to cleaner energy sources. However, concerns about environmental impacts and community welfare persist.

Furthermore, the reform proposes significant changes beyond the energy sector, including reducing the number of federal deputies and senators, electing electoral and judicial officials through popular vote, and restructuring government agencies to enhance efficiency and accountability. López Obrador's vision reflects his commitment to transformative policies, though it remains subject to legislative and public scrutiny amidst broader debates on governance and democratic principles in Mexico.