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Production Goal Underpins Industry's Strategic Role

Manuel Rodríguez - Chamber of Deputies
President of the Energy Commission

STORY INLINE POST

Tue, 01/21/2020 - 11:15

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Q: What is the role of the oil and gas sector in the National Development Plan?

A: The energy sector has to be the main engine for Mexico’s economic development. Our strategy regarding hydrocarbons is to increase oil production. In the last 10 years, production has decreased approximately 50 percent. In 2018, 1.8MMb/d were produced and our goal is to reach 2.6MMb/d in 2024. Also, we want to bolster the national refining system. It needs maintenance and must be reconfigured. But existing refineries must come together to form a single unit with the new Dos Bocas refinery. By 2024, the goal is to use only 30 percent of imported gasoline and only 7 percent of diesel. This will allow Mexico to have energy security and sovereignty.

Q: What is the relationship between MORENA’s legislative group and PEMEX?

A: It is one of total support. We have approved a reform based on the national Federal Revenue Law on Hydrocarbons, which dictates that the country’s revenue from PEMEX’s operations has to be reduced from 65 percent to 58 percent in 2020 and to 54 percent in 2021. This reduction will provide PEMEX with additional resources. Regarding PEMEX’s debt, which is around US$100 billion, the current strategy is already showing promising results. The company’s debt is clearly diminishing and will continue to do so progressively. The previous administration left the company in critical condition and it will take a major effort to put PEMEX back on its feet.

Q: What actions is the Energy Commission taking in matters related to directing investment to specific oil fields?

A: We listen to all players in the industry to understand areas of opportunity that should be addressed. Whenever the sector evolves and new technologies change the rules of the game, we have to adapt the regulations. Strategic projects such as Dos Bocas and projects awarded to companies after the enactment of the Energy Reform were reviewed to ensure that results are achieved as expected. Nonetheless, from a technical point of view, PEMEX has complete independence on what fields to exploit and what kind of financing it will use.

Q: What do you want to achieve with the construction of the Dos Bocas refinery?

A: The project is perfectly justified and viable. This is taken from the perspective that the state’s role is not to generate profits, but to provide services in strategic areas. However, it is also financially sound, because it will be self-financed and will be instrumental in achieving energy independence. Not having to spend on transporting fuels from other countries, while processing raw materials in Mexico is cheaper than elsewhere. PEMEX will be able to sell fuel at much lower prices than today. Dos Bocas will also boost the development of Mexico’s southeast region, which is in need of jobs and wealth.

Q: What talks have taken place regarding the potential restarting of the bidding rounds?

A: The rounds will be restarted. In collaboration with private companies, PEMEX will reach its production goals. In order to include private investment that is geared toward achieving production goals, the rounds must be put back in place. Oil and gas projects are considered medium and long term, so the project pipeline has to be continuously replenished. Not all projects are successful, so we must plan ahead. If a clear win-win formula is established, then there is no reason not to go forward. What will not be tolerated anymore is corruption, which is an enormous liability that is weighing on Mexico’s development.

Q: What are the main points on your agenda for 2020?

A: We are focusing our efforts on developing mechanisms that give PEMEX the highest possible level of financial health. From a technical perspective, the company is worldclass. Also, we will keep working to open new rounds and provide continuity for the next elected administration and for the next 30 years. Public policy will therefore be more intelligent and efficient and private companies can rest assured that their investments will be protected.

 

Manuel Rodríguez is a lawyer and politician from the state of Tabasco who has worked in the labor, fishing, environmental, cultural and energy sectors. He was elected in 2018 as one of the MORENA's federal deputies from Tabasco.

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