With Mexico in lockdown, hope is citizens, economy can weather the storm

Mexican authorities have ordered a loosely defined lockdown closing all but essential services, such as pharmacies and supermarkets, through April 30.

“Stay home, where possible,” foreign secretary Marcelo Ebrard said Monday, urging especially the elderly, the infirm, pregnant women and young children to follow the stay-at-home order.

“This will be a very difficult month,” he said, adding “it will be more than a year of severe economic impact.”Daily Coverage, Analysis, & Price Data for Mexico’s Emerging Natural Gas Market

Marcelo Ebrard

He said that there will be no curfew enforced, but that the National Guard is “caring for our strategic installations and means of communication, as well as protecting society itself.”

While the government tries to scrap together an economic rescue plan, major challenges face the business community and economic activity, not to mention the millions of citizens without a safety net.

Luis Miguel González, the editor of the daily El Economista, believes that the dramatic Mexican economic collapse of 1982, 1994 and 2009 could be paltry compared with what awaits the country this year. As it was, Mexico was already in a difficult position. Last year, Mexico saw negative economic growth.

González wrote he believes that several of the pet projects of President Andrés Manuel López Obrador should be instantly shelved or scrapped to free up funds. These include the train to promote tourism in the southern Maya region, the second Mexico City airport to be built at Santa Lucia, and what most energy analysts have regarded as the biggest white elephant of them all, the refinery to be built at Dos Bocas in the state of Tabasco. But López Obrador has been adamant that these will go ahead.

Meanwhile, López Obrador has been criticized for being extremely slow in adopting social distancing and other tough measures, especially in comparison to other countries in the Americas.  

During his Thursday morning press conference, the president said that the political opposition wants the coronavirus crisis to hurt the government.

“They aren’t worried about the pandemic and the economy, because they don’t want the loss of their privileges. Their selfishness is what drives them to despair.”

Economic Concerns

The head of business group Consejo Coordinador Empresarial (CCE) Carlos Salazar last week warned of fears among some in business that the already rising crime statistics could further be swollen if the economy were to collapse in a financial crisis created by the pandemic.

“The problem is that about half of the population lives under the poverty line,” Roberto González, business editor of the left-wing daily La Jornada, told NGI’s Mexico GPI.

“Almost none of those people have any employment in the formal sense. Some have jobs but are off the books, with no safeguards or benefits. Others might be categorized as micro-entrepreneurs, such as shoe-shine boys, and ladies selling sandwiches. If they don’t have any food to bring home to their families, that could create a very big problem.”

Ebrard has said that he warmly welcomes the strong support that the government is receiving from the private sector.

“We have been more than happy,” he said, “by the private sector’s positive response, including financial support. Without the support of business, measures like the ones we are implementing would not be possible. Everyone has to close ranks.”

State oil and gas firm Petróleos Mexicanos (Pemex) issued a statement earlier this week that it is fulfilling its pledge to “ensure fuel supplies and avoid anything that might affect the nation’s development and its economy.”

All storage and dispatch terminals have stocks sufficient to meet the needs of the population, the statement added. Pemex employees have been ordered to work from home if they are over sixty years of age, visited other countries, or if their health is viewed as delicate. Under the terms of the government’s ‘healthy distance’ rules, all business and staff social gatherings are suspended.

Pemex, unlike other national oil companies facing crashing oil prices, has not announced any change in spending or production plans.

The price crash however has all but erased any hope of profitability at Pemex’s so-called priority onshore and shallow-water fields, Mexico City-based analyst Arturo Carranza told NGI’s Mexico GPI recently, citing that costs at these fields are higher than at Pemex’s legacy producing fields.

North American E&P companies have announced vast spending cuts in the wake of falling prices. This includes Talos Energy Inc., which is targeting a final investment decision this year at its Zama oil discovery offshore Mexico.

Mexico had 1,378 coronavirus cases, with 37 deaths, as of Thursday, according to Johns Hopkins University.

Source: naturalgasintel.com

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