Xóchitl Gálvez Vows to Complete Dos Bocas

Xóchitl Gálvez, presidential candidate for the Frente Amplio por México coalition, has promised to finish the construction of the Dos Bocas refinery, a project plagued by multiple delays, if elected. Gálvez has spoken out about her approach to allow for more private participation in the energy and oil and gas industries.

Gálvez criticized the government for inaugurating the project in 2022 and repeatedly delaying its completion. The latest deadline set by President Andrés Manuel López Obrador was February, but the refinery is still expected to reach full capacity by the end of March 2024.

At the beginning of his administration, President Andrés Manuel López Obrador stated that the refinery would cost US$8 billion, but his energy team has revealed several significant budget increases. The latest figure released by PEMEX's Board of Directors puts the budget for Dos Bocas at US$16 billion, double the original cost.

Gálvez stated that if elected, she would investigate the cost overruns, citing the case of the company Huerta Madre, which won a contract worth MXN$5 billion a week before its creation. She claimed that the owners have connections with the former Secretary of Energy, Rocío Nahle, who was in charge of the Dos Bocas construction. Nahle has previously denied the allegations, stating that neither family members nor friends were involved in the Dos Bocas refinery.

Gálvez pledged to finalize the refinery project if elected, providing jobs for Tabasco, and promising to train locals so that individuals from other parts of the country would not need to be brought in.

Moreover, Gálvez recently emphasized the need for private investment in PEMEX and CFE due to fiscal deficits and constraints on public spending. Speaking at the 2024 Plenary Meeting of Citibanamex, she expressed concern over PEMEX’s lack of profitability and the challenges posed by its credit ratings.

Gálvez advocated for private investment in line with constitutional provisions, suggesting it as a solution to address energy infrastructure needs amidst fiscal pressures and the nearshoring phenomenon. She supported the return of electricity auctions for clean and affordable energy production, whether by CFE or private companies. Emphasizing the importance of transparent private sector participation, Gálvez underscored the government's inability to solely finance the required energy infrastructure amid constrained public spending.

The news comes as PEMEX financial results yield stable numbers, however heavily supported by tax breaks and direct capital injections.

President López Obrador made energy self-sufficiency carried out by a strengthened PEMEX and CFE, a central part of his energy policy. However, this apporach has resulted in disputes with the private sector and has even reached an energy dispute with the US and Canada. The Ministry of Economy has assured that the matter is behind and the government is only awaiting a signed memorandum of understanding to put the USMCA dispute behind. Nonetheless, the dispute still appears as central to Biden's 2024 Trade Agenda.

Moreover, Gálvez has openly spoken out about her approach to include more private participation and loosen the market to more participation and competitiveness. On the other hand, MORENA’s candidate, Claudia Sheinbaum, has explained that she will follow the current president’s energy policy and PEMEX and CFE will continue to be the central actors of the market.