January’s deep-water tender of oil and gas rights in Mexican waters could be undermined by uncertainty surrounding the North American Free Trade Agreement (NAFTA), according to Reuters.
US President Donald Trump made scrapping or transforming NAFTA – a 23-year-old agreement between the US, Canada and Mexico – one of the planks of his election campaign. He says he wants to renegotiate the deal in terms he feels would be more favourable to US businesses.
Doubts have ratcheted up among oil executives as the latest round of NAFTA talks are scheduled for the middle of this month in Mexico City and Trump has threatened to pull the US out altogether if he does not get a deal to his liking.
That means the investment guarantees of NAFTA may not be dependable and disputes could fall to Mexican courts, which introduces a higher degree of risk and could dissuade some major players from participating in the January auction.
The auction is set to offer 29 blocks containing an estimated 4.2bn barrels of potential reserves and so far 17 companies are in the process of pre-qualifying.