MEXICO CITY – The Mexican government said Thursday it was working to reverse an order from Texas Governor Greg Abbott to restrict natural gas exports in the middle of a deadly winter storm.
Abbott’s order has increased tension between the two countries, with senior Mexican officials protesting The governor’s decision to cut gas supplies while Mexico works to fix its own cold weather mass power outages.
“We are doing our diplomatic work to prevent this from happening,” said Mexican President Andrés Manuel López Obrador at a press conference on Thursday, referring to Abbott’s orders. “This would not only affect Mexico, but also other states in the Union.”
Governor Abbott on Wednesday ordered Texas producers exporting natural gas from the state to instead sell to state power producers through February 21.
The impact of Abbott’s actions south of the border underscored the extent to which Mexico relies on the United States for much of its power, even as López Obrador pushes for greater Mexican energy sovereignty.
Gas-fired power plants generate around two thirds of Mexican electricity. According to the US Energy Information Administration, 96 percent of natural gas imports came from the US in 2019.
The arctic weather in Texas has frozen natural gas pipelines between the two countries, according to Mexican energy officials, which, along with a surge in electricity demand in the US, disrupted power generation in northern Mexico and left nearly five million customers in Mexico without power earlier this week.
The mass failures affected not only private homes, but also industry. According to Reuters, major manufacturers such as General Motors and Volkswagen had to cease operations, resulting in an estimated loss of $ 2.7 billion.
On Thursday, the Mexican state-owned energy company, the Federal Electricity Commission (CFE), announced that it would restore electricity to all users by generating power from other sources such as hydroelectric and coal-fired power plants.
This most recent outage follows one in December when around 10 million people briefly ran out of electricity.
The Mexican authorities have quickly shifted the blame for this week’s outage to the country’s northern neighbor, and Mr López Obrador has come out against critics of the state-owned energy company.
“Although the problem lies in the US, more precisely in Texas, all criticism is directed against the Federal Electricity Commission, against the government of Mexico,” said the president on Thursday.
Mexican Economy Secretary Tatiana Clouthier said on Twitter that she spoke with Roberta Jacobson, one of the Biden government’s top advisors on the southwest border, about the problems Mexico and the United States are facing due to the “Texas Emergency” situation. and said both countries were looking for “immediate solutions”.
Energy experts said the recent blackout will add ammunition to Mr López Obrador’s drive to overtake the energy sector and ensure Mexico’s energy independence, regardless of the cost to users or investors.
“At the moment it’s easy to point out Texas, the US and the reliance on gas imports,” said Adrián Garza Patiño, senior analyst at Moody’s, the rating agency. “And even more so with the response from the Texas government.”
Mr López Obrador, who has rebuilt both CFE and the state-owned oil company Pemex, a central pillar of his political and economic agenda, sent a bill to Congress this month to suppress competition from private renewable energy plants through government measures could. its own plants, many of which run on fossil fuels, initially provide the country with electricity.
The proposal was met with outcry from corporate groups and environmentalists alike. The changes are likely to severely affect Mexico’s commitment to emissions reduction by preferring coal and oil power plants to privately financed renewable energies.
Mr López Obrador’s political party, Morena, has a majority in both houses of Congress, but the future of the law remains uncertain. On Monday, Mexico’s antitrust watchdog urged lawmakers not to approve the proposal, saying the reforms would significantly stifle competition.
Later in the week, the Finance Committee in the House of Representatives, the House of Commons, said the reforms could trigger electricity price hikes and risk violating Mexican commitments under the U.S.-Mexico-Canada trade deal, local media reported.
Even if the bill doesn’t gain momentum, Mr López Obrador’s urge to ditch energy changes 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 considering leaving the country or at least not making any further investments, which is a crucial element for economic growth.”