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Perry: US-Mexico to develop joint energy strategy

13 Jul 2017 18:51 (+01:00 GMT)
Perry: US-Mexico to develop joint energy strategy

Houston, 13 July (Argus) — The US and Mexico will develop a North American energy strategy to ensure security, stability and economic growth for both countries, US secretary of energy Rick Perry said in a closely watched joint meeting with Mexican energy minister Pedro Coldwell today.

"Mexico's prosperity is inextricably intertwined with our prosperity … our economies are forever linked," Perry said at the Mexico City event. "We must build a better future together, starting with a vision of North American energy dominance … and build a competitive energy industry together."

The strategy, which also encompasses Canada, will focus on the development of energy resources across the continent, the promotion of trade and the enhancement of security and resilience of cross-border infrastructure.

The US-Mexico relationship has been tense since US President Donald Trump took office in January pledging to crack down on illegal immigration, force Mexico to pay for a border wall, consider imposing border taxes, and renegotiate the 25-year-old Nafta trade agreement with Mexico and Canada.

The mood at the press conference was markedly more amicable than a visit in February by US secretary of state Rex Tillerson, signaling that the deep investments in the energy sector on both sides of the border are providing common ground. Neither Perry nor Coldwell took questions from the assembled press.

"We have decided to take our bilateral energy relationship to a new level in order to create mutual benefits and new opportunities in favor of energy security, interconnection and integration of our energy markets," Coldwell said.

Mexico's groundbreaking 2014 energy reform, that ended the monopolies of state-owned Pemex and CFE in the oil, gas and power sectors, has led to a sharp spike in private sector investment, particularly from the US.

Cross-border energy commerce between Mexico and the US reached $39bn last year. US companies have so far this year committed $7.5bn in Mexico's two long-term electricity auctions and two rounds of oil and gas tenders, Coldwell said.

Some 58pc of US natural gas exports and 48pc of US refined products exports go to Mexico, while 3,781 GWh of electricity flowed between the two countries along 11 transmission lines last year, Coldwell said.

Specific plans envisaged under the strategy so far include the easing of regulations and permitting to facilitate cross-border infrastructure projects and electricity interconnections, reinforcing emergency response mechanisms to provide backup power supply in the event of natural events or cyberattacks, a nuclear power agreement that will see personnel and technology exchange, and expansion of a carbon capture program.

Both Coldwell and Perry emphasized the importance of increasing the security and reliability of shared electricity infrastructure, singling out cyberdefense as a major focus for cooperation.

Neither Perry nor Coldwell made specific reference to the renegotiation of Nafta — talks are set to start mid-August — but the press conference signaled the importance of the energy sector between the two countries.

US trade representative Robert Lighthizer in meetings with members of Congress in the past six weeks sought to assure them that the US administration will aim to ensure the free flow of energy across the borders in the newly renegotiated Nafta agreement. US oil industry group the American Petroleum Institute wants to preserve provisions in Nafta that place no tariffs on oil and gas products and enable cross-border market access.