In August, Claudia Sheinbaum appeared with her mentor, President Andrés Manuel López Obrador, to inaugurate one of the most expensive infrastructure projects in Mexican history: a $16 billion oil refinery.
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The sprawling complex in Tabasco is the culmination of an energy strategy that López Obrador will hand down to Sheinbaum, a climate scientist, when he takes office in October.
While other countries are frantically turning to clean energy sources, Mexico has made a colossal bet on fossil fuels, and the costs of that strategy are now painfully apparent.
Mexico’s oil production fell this year to its lowest level in 45 years, one of the world’s steepest declines this century. Blackouts plagued the country after López Obrador snubbed wind farms that could help meet electricity demand. Natural gas imports are soaring, making energy independence an increasingly distant dream.
Pemex, the state-owned oil company, is now the world’s most indebted oil company after a spending spree to build projects. To avoid defaulting on its nearly $100 billion debt, the company has required multi-billion-dollar bailouts using taxpayer money.
The disarray exposes a dilemma that will shape the country’s fortunes — and Sheinbaum’s presidency — for years to come. Sheinbaum, who has a doctorate in energy engineering, has signaled that she wants Mexico to pivot toward clean energy sources. But the biggest obstacles may be her mentor’s nationalistic, oil-obsessed energy policies — and her reluctance to disagree with the man who helped her into office.
At the refinery’s inauguration, Sheinbaum barely mentioned her plans for an energy transition. Instead, she expressed support for López Obrador’s oil policies, calling the refinery, called Olmeca, “majestic” while criticizing previous leaders for exporting Mexico’s oil and opening up the energy industry to private investment.
But the refinery, which aims to tip Mexico toward energy self-sufficiency by processing the country’s crude oil into gasoline rather than relying on U.S. refineries, is far from fully operational, the International Energy Agency reports. In total, the cost of the Olmeca refinery has doubled its initial budget of $8 billion.
Sheinbaum has said her energy plans include building solar plants, pressuring Pemex to extract lithium used in electric vehicle (EV) batteries, and building EV charging infrastructure.
On March 18, the 86th anniversary of Mexico’s nationalization of its oil resources, Sheinbaum said she would limit Pemex’s oil output to 1.8 million barrels a day — not far from what it is producing now — as a way to “decouple” energy consumption from economic growth by focusing on clean energy and energy efficiency improvements.
“The growth in demand must be absorbed by renewable energy sources,” said Sheinbaum.
Still, details remain scant on how he would carry out such a change, especially given that his financial room for maneuver will be limited. Another legacy of López Obrador will be a budget deficit close to 6 percent of gross domestic product. Pemex’s debt alone accounts for about an additional 6 percent of GDP.
There are also doubts about how far Sheinbaum can go in a country where oil remains central to national identity. One of Mexico’s founding myths, dating back to its oil expropriation in 1938, is that it is an oil power, with oil at the heart of its economy.
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