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Mexico’s energy ministry and PEMEX tried to block stricter flaring rules

Mexico’s energy ministry tried earlier this year to block the publication of stricter rules on natural gas flaring, according to documents seen by Reuters, saying they would hurt state oil company Pemex and its plans to increase production.

The documents, received through a freedom of information request filed by Reuters, show a concerted effort by the energy ministry to stop Mexico’s official gazette from publishing tighter rules drafted by the independent energy regulator.

The ministry said they would “seriously impact” the operations of Pemex and cause “irreparable losses.”

Publication in the official gazette is a necessary legal step for such rules and laws to come into effect.

The changes to existing rules on flaring and other waste did become law in June — an unusually long delay — after the energy ministry and the regulator came to an agreement.

Still, the attempt by the energy ministry to block them lays bare the regulator’s struggle to rein in Pemex, Mexico’s biggest company and one with close ties to the government.

Neither the energy ministry nor Pemex responded to requests for further comment beyond what was released in the documents. The interior ministry, which oversees the gazette but has no role in the energy regulations, also had no further comment.

Reuters has previously documented how Mexico has repeatedly flouted its own pledges to cut greenhouse gas emissions, especially through flaring from oil fields, and how Pemex went back on its own commitment to do so.

Reuters received nine internal documents related to the energy ministry’s request, including minutes from two meetings, as well as six letters and one email sent between the energy and interior ministries and the regulator.

The documents received by Reuters are dated between February 17 and June 17.

The rules, which were published June 23, seven months after being submitted by the regulator, seek to restrict how companies manage and account for the gas that comes to the surface as a byproduct of oil exploration and production.

In effect, they make excessive flaring more difficult to justify and increase oversight by the regulator.

The first letter, dated February 17 and sent by senior energy ministry official Jorge Arevalo, “requests, based on instructions from higher up” that the gazette “does not move ahead with the promulgation of the modified rules.”

It said the changes “could generate irreparable losses for the State Production Company” by making its infrastructure “of little viability.”

Reuters was unable to determine who the “higher up” instruction came from. Arevalo did not respond to a request for comment sent on LinkedIn.

The letter from Arevalo goes on to say that it is of “strategic importance for the present administration, the rescuing of Petroleos Mexicanos so that it can once again be a lever for national development.”

Two legal experts who reviewed the documents for Reuters said the energy ministry had overstepped in its request. Mexican law stipulates that the regulator has technical autonomy in making such rules.

“No entity has the power to impede or delay a publication in the Diaro Oficial de la Federacion (the gazette),” said Santiago Arroyo, one of the energy lawyers who studied the responses. “It’s an abuse of power.”

President Andres Manuel Lopez Obrador has vowed to revive the fortunes of Pemex, as Petroleos Mexicanos is known, and reverse years of declining output at the world’s most indebted oil company.

At the same time, he has tried to assuage growing U.S. concerns about flaring and pledged during the recent COP27 climate conference to reduce greenhouse gas emissions.

Under Lopez Obrador’s administration, flaring in Mexico has risen to the highest levels since current records began.

Source: El Financiero

Mexico Daily Post


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