Is the third time the charm of AMLO’s energy reforms?

If at first you don’t succeed, try, try again. President López Obrador has taken this old adage to heart. His government has spent most of the last year trying to change energy regulations to favor its national state-run oil and energy champions and undo a landmark 2013 reform.

When those efforts were put on hold in the courts, he attempted legislative changes this year. As might be expected, these also encountered legal challenges.

Its last attempt took place via the modification of the rules of foreign trade and customs. Experts say the move will limit the import and export of hydrocarbons in defiance of Mexico’s constitution, the US-Mexico-Canada deal and WTO rules, undermine Mexico’s competitiveness and hurt to major players like Chevron, Shell and ExxonMobil.

The measure was quietly published in the official gazette, the government’s register of legal notices, earlier this month. This means that companies other than state-owned production companies – namely the oil company Pemex and the power company CFE – will lose the flexibility to import and export hydrocarbons to different parts of the country.

Previously, companies such as Chevron that operated fuel storage terminals or other infrastructure could import the hydrocarbons and go through customs at their facilities rather than having to use official customs posts.

However, only state-owned enterprises will now be allowed to import or export hydrocarbons through these alternative locations.

AMEXHI, the Mexican Hydrocarbons Association, did not immediately comment. The move will limit companies to ports, border crossings and other official customs posts, said Christopher Ávila, vice-chairman of the hydrocarbons commission of Coparmex, the employers’ confederation.

“This affects storage capacity and competitiveness, especially for petroleum products,” he said, and gives Pemex an “excessive and undue” competitive advantage.

Eduardo Pérez Motta, former head of Mexico’s antitrust authority, went even further:

“It is a totally discriminatory decision, it is not competitive,” he said.

López Obrador has made strengthening Pemex and CFE the cornerstone of its energy policy and wants to stop oil exports in order to focus on domestic refining to achieve its goal of self-sufficiency in fuel. He promised he would not increase fuel prices, which are widely watched by consumers.

But the move – which will likely face legal challenges – creates uncertainty over the operation of fuel storage terminals and other infrastructure, noted Campa & Mendoza, a law firm.

“Since only Pemex can be granted these authorizations, are we facing a ‘forced sale’ of assets in favor of the state-owned productive enterprise? Regarding new authorizations, the new rules may affect exploration and production projects that require the LDA [a special export permit] to export crude oil or natural gas directly from its offshore facilities, ”he said.

A source from the oil and gas industry who asked not to be named said:

“It looks like a duck, it walks like a duck and sounds like other measures designed to use executive orders to restore to Pemex what it has failed to achieve for decades … companies that plan to challenge this provision through injunctions.

In addition to injunctions, companies could consider investor-state or interstate litigation under the USMCA.. The ruling could be challenged under WTO rules on the grounds that the new measures constitute a trade barrier, vila said.

We’ll see if the rule survives – or if the courts send López Obrador back to the drawing board again.