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World

Mexican president says oil production needed before considering new deep water auctions

MEXICO CITY: Mexican President Andres Manuel Lopez Obrador said on Wednesday he will not cancel oil contracts awarded un

Dec 05 2018

MEXICO CITY: Mexican President Andres Manuel Lopez Obrador said on Wednesday he will not cancel oil contracts awarded under the previous government's energy reform, but he wants to see production from existing contracts before considering new deep water auctions.

Lopez Obrador, who took office on Dec. 1, also said he wants to ensure oil companies are not using contracts for speculation, and are producing oil.

The leftist leader has blamed his predecessor, Enrique Pena Nieto, for causing oil output to plunge by opening the energy sector to private investment and reducing public investment in the industry.

While campaigning for the July 1 election, Lopez Obrador said he would review private contracts for signs of corruption, putting markets and investors on edge over the future of the sector in Latin America's second largest economy.

But on Wednesday, he said his government would not cancel any contracts already issued.

"The contracts will not be canceled, so there won't be a loss of confidence," he said.

When asked about future deep water auctions, he said he would evaluate the productivity of existing contracts before making a decision.

"We want them to show that they're going to invest and that they're going to produce oil," he said.

Copyright Reuters, 2018