In Project Finance International Article, Dino Barajas Looks at Future of Mexican Energy Sector
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Project Finance International has published the article “Mexican Energy at a Crossroads,” written by Akin Gump global project finance partner Dino Barajas. The article, which looks at the impact that Mexico’s new President might have on the Mexican energy sector, was published in PFI’s “Yearbook 2019.”
Barajas writes that the election of Andrés Manuel López Obrador, who rose to prominence in Mexico over the past two decades “by espousing socialistic and nationalist policies,” comes at an interesting time for Mexico. Following the enactment of historic changes “with the increased involvement of the private sector in hydrocarbon exploitation and exploration” under Mexico’s former leader, Barajas says the critical question for President López Obrador “will be whether he focuses on stabilizing the value of the Mexican peso and the performance of its stock market … or whether he begins to institute populist policies to fulfil campaign promises to the masses that elected him.”
It may be important, Barajas writes, for President López Obrador “to allay private investor concerns in order to preserve Mexico’s industrial productivity and jobs,” but the national budget “is insufficient to meet the capital costs necessary to construct all the new generation facilities and natural gas pipelines needed to meet the country’s growing energy demands.” Despite some uncertainty, Barajas adds that “a number of industry players who see the long-term opportunities remain resolute and continue to expand their market share as their competition waits on the sidelines for the dust to settle.”
Concluding, Barajas writes that the next year will be “a unique opportunity for companies that believe in the long-term trajectory of [Mexico’s] energy market to position themselves as market leaders and garner market share.” The key will be how well these companies “understand the nuances of the market and whether they surround themselves with advisers well-versed in the history and development of the energy market to-date.”
To read the full article, please click here.