CNH President Resigns His PostBy Conal Quinn | Tue, 09/13/2022 - 16:02
CNH President, Rogelio Hernández Cázares, has stepped down from the position just two years into a seven-year term. In response, President López Obrador has proposed a shortlist of three candidates to be presented before the Senate, including Agustín Díaz Lastra, a PEMEX Board Member and economist by profession who has held various public roles in his home state of Tabasco, Romeo Antonio Rojas, an engineer who has worked on extra heavy crude projects and currently serves as PEMEX's Deputy Head of Strategic Projects and José Sánchez Pérez, Chief Administrator of the Tehuantepec Isthmus corridor project with a background in economics.
Unlike the regulatory body for electricity, CRE, whose perceived favoritism of state-owned CFE has been cited as a major reason for the ongoing USMCA consultation, CNH under Hernández was celebrated for its regulatory autonomy. In recent months, CNH has clamped down on PEMEX for its failure to comply with its field development plans. One such example came in October when the regulatory body issued the NOC with a record fine for excessive flaring at the priority Ixachi field. NASA satellite images obtained by Reuters attested to an estimated 24.9Bcf of gas flared since 2021 as Ixachi reached the Top 10 of flaring offenders globally.
CNH was established under the presidency of Felipe Calderón to administer the bidding processes for tenders, assess E&P development plans for operators and issue reports examining the progress of assigned fields. In 2018 however, immediately upon assuming the presidency, López Obrador suspended new licensing rounds for private operators until lofty production targets and investment plans for contracts previously assigned were met.
Hernández’s appointment as CNH President was criticized at the time by members of the opposition, who claimed the former Director of PEMEX’s fertilizers arm lacked the “profile and capacity” of more experienced candidates. They furthermore accused López Obrador of inserting a political ally in place of the outgoing President, the pro-market Juan Carlos Zepeda. Industry analysts have suggested, however, that the relationship between Hernández and López Obrador became increasingly strained with frequent clashes regarding CNH permitting processes, which has resulted in delays at fields categorized as a priority by PEMEX. López Obrador is believed to have grown increasingly frustrated with CNH’s red tape getting in the way of upstream development. The hydrocarbons sector needs to rapidly ramp up production to meet ambitious 2024 targets required to achieve energy sovereignty amid the President’s push to re-center PEMEX as the pillar for national development.
For its part, the Mexican Association of Hydrocarbons Companies (AMEXHI), another cornerstone of the 2014 Energy Reform, issued a statement that recognized Hernández’s efforts and called for the Executive Branch of the Senate to make maintaining CNH’s impartial profile and regulatory continuity their top priorities. While commending the prompt shortlisting of candidates, AMEXHI also expressed concern that until a successor is chosen, the regulatory body would be unable to carry out its responsibilities since it now lacks a quorum. Under the Law of the Coordinated Regulatory Bodies in Energy Matters (LORCME), CNH’s Board of Commissioners is supposed to be composed of seven full-time members. However, in recent months, the body had been meeting with just a minimum of four commissioners prior to Hernández’s resignation.