Mexico’s moment of resolve

US President Donald Trump’s immigration wall and nebulous border tax plans are sparking a Mexican backlash likely to find expression in the country’s oil patch. US companies have a lot at stake.

The abrupt souring of bilateral relations coincides with Mexico’s historic opening of upstream, midstream and downstream sectors that had long been the exclusive domain of state-run Pemex. The dismantling of the company’s monopoly was already a lot to swallow for Mexicans nurtured on resource nationalism that was embodied by their much-diminished national champion. Trump’s blunt words threaten to persuade Mexicans that this sweeping reform path, quietly encouraged by Washington, is a misguided route to submission, as interpreted by the country’s emboldened political parties on the left.

US oil companies and providers of oil services and supplies are invested in the Mexican reform process, imperfect as it is. A whole host of opportunities from pipelines to product imports suddenly became available after the landmark reform was passed in 2014, and US firms were among the best placed to compete.

Trump’s confrontational approach will not directly short-circuit the energy reform. But it is compounding pressure on Mexico’s unpopular president Enrique Pena Nieto to defend his country with short-term measures, and unleashing emotions that will color the way the process is rolled out as his opponents position themselves ahead of 2018 elections.

It may be too late to expect that Trump’s constituents in the US business community will soften the new president’s approach toward Mexico. Even if they do, Trump’s harsh words are already uniting Mexicans in a way that could haunt Washington long after the mercurial real estate tycoon returns to his gilded tower.

Go on, treat yourself!

After being a pair of Scrooges for the past two years, oil and gas majors BP and Total have rediscovered the joys of treating themselves to shiny expensive presents this holiday season. The gloss comes from access to new low-cost production now and in the future — gifts that keep on giving.

When oil prices started sliding in mid-2014, most oil and gas firms had little choice but to tighten their belts, postponing and cancelling projects, reducing headcount and focusing on efficiency. Two years on, this disciplined approach to spending has made them leaner and, as a result, more confident in their ability to weather the storm of oil prices staying lower for longer.  Continue reading