Onshore round is slated for Sept.; Mexico’s newly elected president López Obrador assumes office Dec. 1

Mexico’s newly elected president López Obrador (AMLO) took more than 50% of the vote Sunday. The president-elect will assume office Dec. 1, 2018, replacing outgoing President Peña Nieto, who has taken a strong position in leading the country toward opening its languishing oil and gas sector to private investment through a number of rounds of bids for offshore GOM acreage.

In September the country is planning to hold an onshore auction, but that may be in doubt, according to comments from GlobalData analyst Will Scargill.

“AMLO has been a fierce critic of the 2014 energy reform, but his tone has moderated somewhat in the run-up to the elections. It is now unclear whether he will hold a referendum on reversing the reforms, as previously promised, but it is likely that the pace and scale of new licensing will be reined in,” Scargill said in a note.

“The president-elect has stated that he will ask outgoing president Peña Nieto to halt the two onshore bid rounds planned for September, before his term starts on December 1st. Once in office he may limit the new opportunities available to investors, seeking to maintain the dominance of Pemex in its onshore and shallow-water heartlands or tighten the terms for new contracts in favor of the state,” Scargill said.

“However, he has stated that a proposed review of existing contracts will be to check for potential corruption and investment protection provisions will limit his ability to roll-back licensing.

“After nine bid rounds the Mexican upstream landscape looks very different, with a variety of companies from major IOCs to small independents holding acreage. However, production is still declining and the outgoing government overpromised on the timeline for the reforms to have an impact on the output. We expect that the first new field development resulting from the process will start production in 2019.

“The sector may in fact see the fruits of Peña Nieto’s reforms during AMLO’s tenure as work progresses in existing contracts, even if new licensing slows,” Scargill said.


López Obrador, an Atypical Leftist, Wins Mexico Presidency in Landslide

From the New York Times

MEXICO CITY — Riding a wave of populist anger fueled by rampant corruption and violence, the leftist Andrés Manuel López Obrador was elected president of Mexico on Sunday, in a landslide victory that upended the nation’s political establishment and handed him a sweeping mandate to reshape the country.

Mr. López Obrador’s victory puts a leftist leader at the helm of Latin America’s second-largest economy for the first time in decades, a prospect that has filled millions of Mexicans with hope — and the nation’s elites with trepidation.

The outcome represents a clear rejection of the status quo in the nation, which for the last quarter century has been defined by a centrist vision and an embrace of globalization that many Mexicans feel has not served them.

The core promises of Mr. López Obrador’s campaign — to end corruption, reduce violence and address Mexico’s endemic poverty — were immensely popular with voters, but they come with questions he and his new government may struggle to answer.

How he will pay for his ambitious slate of social programs without overspending and harming the economy? How will he rid the government of bad actors when some of those same people were a part of his campaign? Can he make a dent in the unyielding violence of the drug war, which left Mexico with more homicides last year than any time in the last two decades?

And how will Mr. López Obrador, a firebrand with a tendency to dismiss his critics in the media and elsewhere, govern?

In the end, the nation’s desire for change outweighed any of the misgivings the candidate inspired.

“It is time for a change, it’s time to go with López Obrador, and see what happens,” said Juan de Dios Rodríguez, 70, a farmer in the state of Hidalgo, a longtime bastion of the governing Institutional Revolutionary Party, or PRI, which has dominated politics in Mexico for nearly his entire life. “This will be my first time voting for a different party.”

In his third bid for the presidency, Mr. López Obrador, 64, won in what authorities called the largest election in Mexican history, with some 3,400 federal, state and local races contested in all.

He won by capturing more than half the vote, according to early returns, more than any candidate since the nation began its transition to democracy nearly 20 years ago. In a reflection of the lopsided vote, his main competitors conceded the race within 45 minutes of the polls’ closing, another historical first.

With his coalition partners, it is likely that he will hold a majority in Congress, potentially giving him more power to enact his policies.

In his acceptance speech Sunday night in Mexico City, Mr. López Obrador sought to unite an electorate polarized over his election, and promised to look out for all citizens — with the poor being first among them.

“I call on all Mexicans to reconciliation, and to put above their personal interests, however legitimate, the greater interest, the general interest,” he said. “The state will cease to be a committee at the service of a minority and will represent all Mexicans, rich and poor, those who live in the country and in the city, migrants, believers and nonbelievers, to people of all philosophies and sexual preferences.”

A global repudiation of the establishment has brought populist leaders to power in the United States and Europe, and conservative ones to several countries in Latin America, including Colombia after an election last month.

“The recent elections in Latin America have exhibited the same demand for change,” said Laura Chinchilla, the former president of Costa Rica. “The results are not endorsements of ideologies, but rather demands for change, a fatigue felt by people waiting for answers that simply have not arrived.”

Mr. López Obrador, who vowed to cut his own salary and raise those of the lowest paid government workers, campaigned on a narrative of social change, including increased pensions for the elderly, educational grants for Mexico’s youth and additional support for farmers.

He said he would fund his programs with the money the nation saves by eliminating corruption, a figure he places at tens of billions of dollars a year, a windfall some experts doubt will materialize.

Realistic or not, the allure of his message is steeped in the language of nostalgia for a better time — and in a sense of economic nationalism that some fear could reverse important gains of the last 25 years.

In this way, and others, the parallels between Mr. López Obrador and President Trump are hard to ignore. Both men are tempestuous leaders, who are loath to concede a political fight. Both men lash out at enemies, and view the media with suspicion.

On Sunday night Mr. Trump posted a tweet congratulating Mr. López Obrador.

Congratulations to Andres Manuel Lopez Obrador on becoming the next President of Mexico. I look very much forward to working with him. There is much to be done that will benefit both the United States and Mexico!

Even as the electoral rage propelling Mr. López Obrador’s rise is largely the result of domestic issues, there will be pressure for the new president to take a less conciliatory line with his American counterpart. Mexico’s current government, led by President Enrique Peña Nieto, has suffered a string of humiliations at the hands of Mr. Trump with relative silence.

But Mr. López Obrador is not the typical Latin American populist, nor does his branding as a leftist convey the complexity of his ethos.

In building his third candidacy for the presidency, he cobbled together an odd group of allies, some with contradictory visions. There are leftists, unions, far-right conservatives and support from religious groups. How he will manage these competing interests remains to be seen.

There is some evidence that Mr. López Obrador knows what is at stake. Though political rivals have painted him as a radical on par with Hugo Chavez, the former socialist leader of Venezuela, Mexico’s president-elect has vowed not to raise the national debt and to maintain close relations with the United States.

Mr. López Obrador, who is commonly referred to by his initials, AMLO, has a history of working with the private sector, and has appointed a respected representative to handle negotiations the North American Free Trade Agreement.

“Today AMLO is a much more moderate, centrist politician who will govern the business community with the right hand, and the social sectors and programs with the left,” said Antonio Sola, who created the effective fear campaign that branded Mr. López Obrador as a danger to Mexico in the 2006 election he lost.

“The great difference between then and now is that the dominant emotion among voters is fury,” Mr. Sola said. “And anger is much stronger than fear.”

On the issue of violence, Mr. López Obrador has largely failed to articulate a policy that goes much beyond platitudes. At one point, he said that amnesty for low-level offenders could be an option, as a way to end the cycle of incarceration.

When the suggestion summoned widespread criticism, he claimed the idea was merely an effort to think outside the box. But analysts say there is little that distinguishes his platform from those of other candidates, or even his predecessor, Mr. Peña Nieto.

More likely, he will find himself in the unenviable position of managing the crisis, as opposed to ending it.

Mr. Peña Nieto came to office in 2012 with a promise to bring Mexico into the 21st century, forging consensus with opposition parties to pass a slate of much needed reforms that overhauled the calcified energy, education and telecommunications sectors.

But to Mr. López Obrador, who has spent much of his political career concerned with the nation’s have-nots, these reforms meant to modernize institutions trapped in the past were little more than assaults on the people.

He has promised to review the contracts for oil exploration awarded to international firms, and to respect those that are clean — and take legal measures against those that are not.

It is possible that the awarding of new contracts will cease, potentially placing Mexico’s future oil exploration and production back into state hands. From there, it is unclear whether Mr. López Obrador would hand the rights back to the nation’s state-run oil company, Pemex, which has suffered severe problems with corruption and inefficiency.

For many, the future of the nation’s oil industry exemplifies the central concern of a López Obrador presidency: uncertainty.

For all the talk of change, many worry his presidency will be a back-to-the-future sort of moment.

“What concerns me the most about the energy and education is the ambiguity of the alternative road ahead, if he decides to roll them back,” said Jesus Silva Herzog, a political-science professor at the School of Government at the Monterrey Institute of Technology and Higher Education.

Some worry about how the president-elect will handle the opposition, as his fiery personality has both delighted and concerned voters.

The authorities called Sunday’s vote the largest election in Mexican history, with some 3,400 federal, state and local races contested.

He has a history of ignoring his detractors, or taking them on in public ways. He refers to the nonprofit community in Mexico, which has been a force for change and democracy, as “bourgeoisie.”

For his opponents, this election cycle has brought the three main parties of Mexico to a crisis point. Mr. Peña Nieto’s party will be vastly reduced in size and power in the new Congress, while the leftist Party of Democratic Revolution may not even survive.

Perhaps the only party with enough power to serve as a counterweight will be the National Action Party, despite having endured a bruising split in the campaign.

On the issue of fighting graft, perhaps the signature element of his campaign, few believe that it will be easy to address the complex realities of systemic corruption.

That could set up Mr. López Obrador to be a continuation of the disappointment that so many voters are reacting to.

“The biggest problem I see are the expectations he has built,” said Carlos Illades, a professor of social sciences at the Autonomous Metropolitan University and a historian of Mexico’s left. “The problem is going to be what he is not able to do. There are people who are expecting a lot.”

 


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