Mexico has reached a deal with gas transportation companies to settle a dispute that had raised fears that the government of President Andrés Manuel López Obrador would not respect previously agreed contracts, threatening fragile business confidence.
The deal reached on Monday night resolves the biggest dispute of his nine-month-old government and will yield savings of $4.5bn for state electricity company CFE, the president told his morning news conference.
The dispute was triggered in July by the leftist nationalist government’s rejection of what it termed “exorbitant” contracts negotiated with the US, Canadian and Mexican companies before Mr. López Obrador took office that had spooked investors and raised the prospect of supply shortages.
Manuel Bartlett, head of the CFE who had threatened legal action over the contracts, said “reasonable and fair” terms had been agreed. He said the initial contracts had implied costs of $12bn for the CFE and the new deal would save $4.5bn. “It will guarantee healthy finances for the CFE,” he added.
Carlos Salazar Lomelín, head of Mexico’s biggest business lobby CCE, who helped broker the deal, called it a “win-win” for both sides.
Mr. López Obrador singled out Carlos Slim, whose Carso Energy group was one of the companies involved, for praise, saying he had been the first to sign on to the agreement. Mr. Slim, a media mogul who is Mexico’s richest man, said the deal would allow businesses to finance more projects.
The renegotiated contracts impact a number of pipelines including subsea South Texas to Tuxpan pipeline beneath the Gulf of Mexico built by Canada’s TC Energy and IEnova, a unit of US group Sempra Energy. This pipeline will be the first to start operations, delivering 2.6m cubic feet a day of gas, Mr. Bartlett said, although he did not say when deliveries would begin
