Mexico is shutting its oil industry for foreign investors

Mexico kept its borders closed to foreign oil interests for nearly 80 years, with the state-owned Petroleos Mexicanos (Pemex) being the only company allowed to drill for gas on Mexican territory. In 2017, then-President Enrique Peña Nieto opened Mexico's sizeable oil reserves to foreign oil companies and investors for the first time in nearly a century, but the long-ailing Pemex has shown little sign of improvement in recent years thanks to overseas financial injections . The last time foreign interests were allowed to invest in Mexican oil, it didn't end well. The then Mexican President Lázaro Cárdenas confiscated the assets of foreign actors, creating the aforementioned nationalized oil monopoly Pemex and banning all international competitors. And now, almost a century later, it looks like history is about to repeat itself. "Foreign energy companies that began pouring into Mexico six years ago after the government opened energy markets and ended a nearly 100-year-old state monopoly are increasingly unwelcome," the Houston Chronicle reported this week. This time around, it's a little more subtle than Cárdenas' aggressive forced exodus, but the message is still loud and clear for non-Mexican energy companies operating below the border: they are no longer wanted. The message came in the form of petty subpoenas and bureaucratic detours that have accelerated and make life unnecessarily difficult for anyone who is not Pemex. "Even after investing tens of billions of dollars, US gas stations in Mexico are being cited for minor or non-existent violations while fuel from US refineries is held up at the border," says the American Fuel and Petrochemical Manufacturers trading group, "reports the Houston Chronicle . "Government officials deny fuel storage permits without explanation. Laws have been changed to benefit the state-owned oil company Pemex." All of this is happening under the supervision of incumbent Mexican President Andrés Manuel López Obrador, a leftist who overturned decades of one-party rule with a landslide election victory in 2018. As part of López Obrador's campaign promise, the Tabasco-born politician made big words about restoring Pemex to its former (very former) state. He promised to take action against widespread bureaucratic corruption in the ranks of Pemex and rampant fuel theft, and to significantly increase oil production. He also made no secret of his disdain for the 2014 Energy Reform Act, which opened Mexican oil to foreign interests, based on his largely nationalist and protectionist belief that the only corporations that benefit from Mexico's resources are Mexican workers, and Mexican companies the Mexican government should be. With this in mind, López Obrador has kept his campaign promises: He has sharply reduced lease sales in the Gulf of Mexico and done everything in his power to undermine Peña Nieto's energy policy, such as restoring Pemex's power to undercut its competitors' gas prices. However, if foreign investors are pushed out, he will not be able to copy the clumsy policies of Cárdenas - the reform is enshrined in the Mexican constitution. So this time around, the weapons of choice are bureaucratic hurdles and hefty, if not entirely legitimate, fees and fines. "The bureaucratic roadblocks pose a threat not only to future US investments in Mexico, but also to what some estimate at nearly $ 100 billion already invested by foreign energy companies, including Texas firms like Phillips 66 and refineries Valero, "reports the Houston Chronicle. Will these protectionist measures and petty power games help free Pemex from its year-long downward spiral? Probably not. The company has long been in serious trouble and going back to the old ways won't fix that - it was the old way of doing things that brought down Pemex in the first place.