Under pressure to increase production, Mexico’s Pemex energy company has opted to risk fines instead of fixing violations.
Pemex, a state-owned petroleum company, is managed and operated by the Mexican government, so its decision to opt for fines instead of repairs represents a major blow to the oil regulator’s struggle to rein in the company, reports Reuters.
Mexico’s hydrocarbon regulator, known as Comision Nacional de Hidrocarburos (CNH), has fined Pemex four times for not complying with its own development plans for two top fields, Ixachi in Veracruz and Quesqui in Tabasco. At both fields, huge amounts of natural gas were being burnt off.
In addition to a waste of resources, flaring releases greenhouse gases that contribute to climate change reports the Economic Times.
The two most recent fines could each reach 120 million Mexican pesos ($6.2 million), said a third source at the regulator with direct knowledge of the matter.
Neither the amount of the two new fines nor the internal discussions about them have been previously reported. And while the fines may seem to be relatively small, they are the highest ever levied by the regulator.
Interestingly, unlike in other countries, fines in Mexico are not made public until the legal process is completed. And the fines are small for a company that had revenues of more than $87 billion between January and September, buoyed by high oil prices
One senior Pemex official told Reuters the fines for violations were worth it because the fines were “small” and the company needed to speed up output to meet President Andres Manuel Lopez Obrador’s ambitious production goals.
And it appears that the fines are worth it since Pemex has appealed all the fines, according to two sources at the regulator – meaning nothing has been paid out.
And here is something else to think about – According to Mexican law, Mexico’s hydrocarbon regulator can only levy fines for breaches of development plans rather than for environmental damage.
A separate environmental regulator, whose head and key members are appointed by the president, is tasked with policing environmental harm but has historically not taken action against Pemex for flaring.
