The U.S. Chamber of Commerce on July 1 criticized the Mexican state-owned power utility CFE's filing with an international court to begin arbitration with several infrastructure companies over pipeline contracts, saying the move could undermine investor confidence.
The CFE said last week it would aim to negotiate a "fairer" outcome to contract disputes with several companies through a mediation process overseen by the London Court of International Arbitration.
The infrastructure firms include Mexican companies Fermaca, Grupo Carso and IEnova, a subsidiary of U.S.-based Sempra Energy, as well as Canada's TC Energy Corp.
The London arbitration court could not immediately be reached for comment.
The U.S. Chamber of Commerce said in a statement on July 1 that it was concerned by the move, stressing the importance of legal certainty to secure foreign investment.
"This action risks sending a negative signal to U.S. and other international investors about the business and investment climate in Mexico," the group said. "We therefore urge CFE and the Government of Mexico to reconsider this decision and to observe the president's pledge to honor the sanctity of existing contracts."
The group did not detail what action it wanted CFE to take.
CFE began talks with pipeline builder Fermaca on July 1 as part of a push to negotiate independently with the companies, CFE spokesman Luis Bravo said.
"All the companies have agreed to talk about the contracts. Today we met with Fermaca to determine how to negotiate," CFE spokesman Luis Bravo said. The talks will take place in parallel to the process in international arbitration court, he added.
Fermaca could not be reached for comment.
Mexican President Andres Manuel Lopez Obrador has pushed back against criticism of the arbitration request, saying the terms of the agreements were "abusive" toward the state.
The U.S. chamber has repeatedly come to Mexico's defense during President Trump's administration, defending the North American Free Trade Agreement when Trump threatened to kill the deal and urging the United States to exempt Mexico and Canada from steel and aluminum tariffs.
The CFE's pursuit of arbitration has sparked criticism from others in the international community. Canada raised concerns about the dispute, and Moody's said the spat was "credit-negative" for the utility, the companies involved and the sector as a whole.
Recommended Reading
US Natural Gas Prices Hold Near 12-week High on Rising Outages
2024-09-24 - U.S. natural gas futures held near a 12-week high as some Gulf Coast oil and gas producers cut output ahead of a possible hurricane.
Hurricane Threatens LNG and Power Demand as Francine Forms in GoM
2024-09-09 - LNG export plants and offshore oil platforms in the Gulf of Mexico are already taking a hit as as Francine strengthens.
Francine Closes, Restricts Oil Export Ports, Shuts in 42% of GoM Oil
2024-09-13 - In addition to hampering ports and refineries, an estimated 41.74% of Gulf of Mexico oil production, or 730,472 bbl/d, has been shut in.
US NatGas Prices Rise More Than 2% on Hot-weather Forecasts
2024-07-12 - U.S. natural gas futures rose more than 2% on July 12 after touching their lowest in close to two-months earlier.
Post-Beryl: US LNG Exports Down While Tankers Await Freeport LNG’s Reopening
2024-07-15 - Partial restart on Freeport LNG is anticipated later this week. Meanwhile, the port itself remained closed July 15 to LNG tankers and others with drafts of more than 39 ft.