López Obrador challenges the United States and bets on creating an energy hub with Central America

In recent years, different Mexican governments have tried to promote an energy development between the United States, Mexico and Central America, taking advantage of the strong production of Texan gas. López Obrador has not been an exception. However, he takes a different turn in placing his strategy in the midst of U.S.-China tensions.

The government has concentrated its most important infrastructure and energy projects in the southern region of the country: the isthmus, the mega Dos Bocas refinery, refinery modernizations, hydroelectric plant rescues, as well as strengthening state-of-the-art energy companies such as Pemex and CFE. According to the opinion of experts, the intention is to promote an energy hub that reaches Honduras and drives the development of the region.

In contrast to its predecessors, the plan plays down the lead role of the United States and opens up space for China. Carlos Salinas de Gortari came up with the plan during the T-MEC negotiations, the government of FOX also proposed it, and during Enrique Peña's government, in 2015, the construction of a pipeline carrying Texan gas to Honduras was again promoted, as well as its expansion to the Nicaraguan Canal.

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The plan was to develop the project through the Los Ramones system and to form an energy hub from North America, which in turn could boost the Special Economic Zones. But as already known, the project did not progress.

The government has concentrated its most important infrastructure and energy projects in the southern region of the country: the isthmus, the mega Dos Bocas refinery, refinery modernizations, hydroelectric plant rescues, as well as strengthening state-of-the-art energy companies such as Pemex and CFE. 

Now, the government of López Obrador is promoting a pipeline to Central America. The proposal is reinforced by the one made in 2019 by ECLAC, in which it recommends the construction of the Electric Interconnection System of the Central American Countries (AIEPAC) and the Mexico-Northern Central American Countries pipeline route. So far, however, the government has focused on the Isthmus pipeline project, which aims to reach the Asian markets.

"Politically speaking, in AMLO's view, Biden and the United States, for the first time are not leading a project that drives development towards Central America, with the Dos Bocas project in the south-east, the Minatitlán refinery, and the Campeche zone," international analyst Ignacio Martínez, coordinator of LACEN-UNAM, told LPO.

In addition, it underscores the participation that the project offers to China, opposing American interests. "While China does not shine in the arena and is not mentioned much, it is gradually gaining participation in south-southeastern projects like those through technology," Martinez says.

Economists aware of the project supported by previous governments said that a better strategy would be to get the support of the United States, along with the rest of Central American countries, to create a development hub in the region and contain China's expansion, a goal that has remained unchanged with Donald Trump and Joe Biden. The plan would also create jobs in the region and mitigate the need to migrate north.

However, specialists accept that there various challenges to be faced. For example, with regard to previous projects, the expert from UNAM notes: "There were many voracious interests coming from the United States from major energy companies, so the project didn't leave the paper. In addition, there are difficulties faced in the region regarding issues with local interests, as well as mafias and the ups and downs of politics."

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In the opinion of Gonzalo Monroy, an analyst in the energy sector, the project to bring Texan gas to Central America also involves a number of challenges. To begin with, he explains, "there is not enough demand and you will not find a large consumer who can activate this project." He recalled that these countries have developed the hydroelectric industry and "they have made remarkable progress in renewable energy," he said. He also noted that, in any case, they could buy liquefied gas from Trinidad and Tobago.

In addition, Carranza noted that "the issue of financing has always been at the heart of the discussion, because energy integration projects require large financial amounts. And it also requires political will."