US Ambassador Acknowledges Difficulties in Mexican Energy Sector

US Ambassador to Mexico Ken Salazar publicly acknowledged the difficulties faced by US energy companies in obtaining permits related to the Mexican energy sector during a forum organized by the Atlantic Council in Washington D.C. Ambassador Salazar was accompanied by Esteban Moctezuma, Mexico's Ambassador to the US. At the panel, both ambassadors discussed the challenges of the bilateral relationship between Mexico and the US on key issues, including energy. 

"We hope that there will be some resolution, otherwise, there can be no confidence in investment in Mexico," said Salazar during the Migration, Energy, Security and Beyond forum in Washington D.C. Salazar acknowledged President López Obrador's openness to meet with Special Envoy for Climate Change John Kerry and Secretary of Energy Jennifer Granholm, as well as to listen to the Biden administration's worries. "We have all expressed our real concerns. At the Department of State, they call it 'concerns', I call them tremors," Salazar said regarding the impact of the energy reform on the bilateral relationship.

Ambassador Esteban Moctezuma said he believed that the energy reform will guarantee the strengthening of CFE and an "open, transparent and efficient" energy market. In addition, Moctezuma emphasized that President López Obrador's main intention is to strengthen the state utility and combat corruption within the energy sector.

According to data from the Electric Energy Distributors Association (ADEE), there are more than 600 pending permit procedures in the hydrocarbons sector related to sale, storage and service stations that have stalled investments close to MX$18 billion (US$887 million). Meanwhile, the Mexican Association of Service Station Suppliers (AMPES) highlighted that during 2021, CRE granted only 105 permits to the fuel sector, the lowest number of permits in recent years, compared to 416 permits issued in 2018, 407 in 2019 and 175 in 2020.

The permit approval stalemates published by ADEE and AMPES support US business sector concerns regarding the adverse effects that a reform could bring to the energy sector. Since 2021, US-based private sector groups have transmitted their worries to the Biden administration about the violations to the USMCA free trade agreement that Mexico’s energy reform may lead to.

"My role as ambassador is to represent the US and to carry out President Biden's wishes. We have to resolve the challenges brought by the energy reform in a way that supports the US vision of creating a clean energy powerhouse in North America" Salazar said.

Ambassador Salazar openly recognizes Mexico's sovereignty in its legislative processes and conveys the US’ respect for this authority. However, during his participation in the forum, he highlighted the relevance of the energy sector in the further integration of North American value chains. "The US’ concern is to support the supply chain integration between the US and Mexico. I have visited some 20 states in Mexico and everywhere I go, I see how our economies are already deeply integrated," Salazar said.