September 6, 2018 / 7:57 PM / 2 months ago

Mexico president-elect plans oil drilling tenders, no new mining taxes

MEXICO CITY (Reuters) - Mexican President-elect Andres Manuel Lopez Obrador said on Thursday his government would launch tenders for drilling oil wells from early December as part of a plan to quickly increase the nation’s crude output.

FILE PHOTO: Mexico's president-elect Andres Manuel Lopez Obrador speaks to the media during a news conference in Mexico City Mexico, August 31, 2018. REUTERS/Edgard Garrido

Lopez Obrador has long criticized the outgoing government’s policy of opening the oil industry to private capital and promises an new approach aimed at strengthening state oil company Petróleos Mexicanos [PEMX.UL], known as Pemex, and refining more crude in Mexico.

The veteran leftist has said he will suspend auctions to give private companies rights to explore and produce from Mexican oil fields until his team had checked existing contracts for irregularities.

Lopez Obrador, who takes office on Dec. 1, did not give details of the new tenders that he announced during a news conference to unveil new members of his economic team, including deputy ministers for mining and foreign trade.

However, an industry source, who requested anonymity because he was not authorized to speak publicly on the matter, said Lopez Obrador was likely planning to offer service contracts to private companies to help Pemex extract more crude.

Mexico’s crude production has fallen to 1.8 million barrels per day, the lowest in decades.

“Tenders to drill wells are already being drawn up, and prepare yourselves, because we are going to launch them from the first days of December,” Lopez Obrador said.

Full-blown exploration and production auctions usually take about six months’ preparation.

Pemex and members of Lopez Obrador’s energy team did not respond to requests for further details.

The former mayor of Mexico City also said he would travel to his home state of Tabasco on Saturday for his first formal meeting with oil companies since the election.

“We’re preparing the rescue plan for the oil industry, which will consist of extracting more oil soon, and we’re going to need these companies that have experience, mainly national companies,” he said.

The incoming president said he did not intend to raise mining taxes in Latin America’s No. 2 economy, but would better distribute resources gathered under a 2014 mining law that created a tax for mining companies.

As part of a plan to stimulate the economy and reduce migration to the United States, Lopez Obrador said he would double the minimum wage in a 30 km (20 mile) zone along the border, halve the value-added tax (VAT) rate there to 8 percent, and lower income tax to 20 percent in the region.

The border area includes several of Mexico’s biggest cities such as Tijuana, Ciudad Juarez and Reynosa.

Reporting by Adriana Barrera and Frank Jack Daniel; Editing by Richard Chang

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