After being swept into power in the 2018 election on promises of big changes in the country’s energy markets, one of President Andres Manuel Lopez Obrado's first “reforms” was to suspend one of his predecessor’s “reforms” — the lively oil and gas production auctions that ended Mexico’s eight-decade-long state oil monopoly.
In 2013 President Enrique Peña Nieto sought to reverse Pemex's aging oil fields decades-long production decline by allowing international investment. The change also aimed to boost government revenue, which is about 40 percent dependent on the oil and gas industry.
While not canceling any of Peña Nieto's energy reforms outright, Lopez Obrado has slowed them. The actions have left investors cautious after several successes under the earlier reforms, including a sizable deepwater oil discovery.
Still, Lopez Obrado has maintained some of Peña Nieto's downstream ambitions by advancing the construction of a long-planned $8 billion 340,000 barrels per day refinery. But many doubt the project’s chances of success given the cost, funding, and 2023 start-up goal.
Until then, Mexico’s petroleum product imports should continue to ascend with growing demand and an undercapitalized refining system. Short-term growth might be faster due to bulging inventories on the U.S. Gulf Coast and few other export options. Currently nearly three-quarters of Mexico’s gasoline comes from U.S. refineries, a substantial and increasing amount by rail.