MEXICO CITY – The Mexican government said on Thursday it was working to reverse an order from Texas Governor Greg Abbott to restrict natural gas exports, part of that state’s effort to resolve widespread power cuts that left millions of people Texans without electricity in the midst of a deadly winter storm.
Abbott’s order has increased tensions between the two countries, with top Mexican officials protesting the governor’s decision to cut off gas supplies as Mexico works to resolve its own massive power cuts as a result of cold weather.
“We are doing our diplomatic work so that this does not happen,” Mexico’s President Andrés Manuel López Obrador told a news conference on Thursday, referring to Abbott’s order. “This would not only affect Mexico – it would also affect other states in the Union.”
Governor Abbott on Wednesday ordered Texas producers who were exporting natural gas outside the state to sell to power generators in the state by February 21.
The consequences of Abbott’s move south of the border highlighted the extent to which Mexico depends on the United States for much of its power, even when López Obrador is pushing for greater Mexican energy sovereignty.
Gas-fired power plants generate about two-thirds of Mexico’s energy. In 2019, 96% of natural gas imports were from the United States, according to the US Energy Information Administration.
The arctic climate in Texas froze natural gas pipelines between the two countries, according to Mexican energy authorities, which, along with an increase in gas demand in the United States, halted energy production in northern Mexico and left nearly five million customers in Mexico without power earlier this week.
The massive disruptions affected not only homes but also the industry, with major manufacturers such as General Motors and Volkswagen forced to halt operations, leading to estimated losses of $ 2.7 billion, according to Reuters.
On Thursday, Mexico’s state-owned energy company, the Federal Electricity Commission, or CFE, said it restored power to all users by generating power from other sources, including hydroelectric and coal-fired power plants.
This last interruption came after one in December that left around 10 million people without electricity.
Mexican authorities were quick to shift the blame for this week’s stoppage to the country’s northern neighbor, with López Obrador responding to criticisms from the state-owned energy company.
“Although the problem originated in the United States, to be more precise in Texas, all the criticisms are in relation to the Federal Electricity Commission, to the government of Mexico,” said the president on Thursday.
Mexico’s Economy Minister Tatiana Clouthier said on Twitter that she had spoken with Roberta Jacobson, a senior adviser to the Biden government for the southwestern border, about the issues that Mexico and the United States face because of the “emergency situation Texas faces” and said the two countries are looking for “immediate solutions”.
Energy experts said the latest energy blackout will add ammunition to López Obrador’s effort to reform the energy sector and ensure Mexican energy independence, no matter what the cost to users or investors.
“At the moment it is easy to point to Texas, to the United States, to dependence on gas imports,” said Adrián Garza Patiño, senior analyst at Moody’s, the rating agency. “And even more so with the reaction of the Texas government itself.”
López Obrador, who made the reconstruction of the CFE and the state-owned Pemex a central pillar of his political and economic agenda, sent a bill to Congress this month that could end competition from private renewable energy plants by making the state its own plants, many of which are powered by fossil fuels, are the first in line to supply the country with energy.
The proposal was met with protests by business and environmental groups, with the changes likely to significantly undermine Mexico’s commitment to reduce emissions, favoring coal and oil-fired power plants rather than privately funded renewable energy.
López Obrador’s political party, Morena, has a majority in both houses of Congress, but the future of the project remains uncertain. On Monday, Mexico’s antitrust body asked lawmakers not to approve the proposal, saying the reforms would severely stifle competition.
At the end of the week, the House of Representatives’ finance committee, the House of Representatives, said the reforms could trigger increases in electricity prices and could violate Mexican obligations under the US-Mexico-Canada trade agreement, local media reported. .
Even if the project does not gain momentum, pressure from López Obrador to dismantle the changes in the energy sector that opened the country to private investment during the previous administration could have a lasting impact on the Mexican economy, analysts said.
“The private sector and foreign investors are concerned about investment conditions or legal uncertainty in Mexico,” said Garza. “Investors are thinking about leaving the country, or at least stop investing more, which is a critical element for economic growth.”