The Energy Department, partnering with the Overseas Private Investment Corporation, announced a commitment Thursday to support U.S. energy companies investing in Latin America.
OPIC, the U.S. government’s development finance institution, plans to invest $1 billion in Mexico’s energy sector over the next three years, Energy Secretary Rick Perry and OPIC President and CEO Ray Washburne announced during a press conference at the World Gas Conference in Washington, D.C.
In addition, the Energy Department will identify regions and sectors throughout Latin America that present investment opportunities for U.S. energy companies. OPIC will assist those companies by providing financing and also insurance when it is unavailable from the private sector.
The partnership marries the value of OPIC – money – with the Energy Department’s technical expertise.
“We refer to Ray as the man with the money, and it’s true,” Perry said at the press conference. “You have the ability to fund some projects that otherwise wouldn’t get done. There is a profound opportunity in Latin America today for their energy future, for their economic security, for their national security. Energy will play at the heart of that.”
Latin America represents almost a quarter of OPIC’s $23.2 billion in global spending. Perry said Mexico’s shale natural gas, combined with the U.S. and Canada, makes up 40 percent of the world’s reserves.
“Yet private sector incentives are needed to foster development of those opportunities,” Perry said, referring to Mexico specifically. Mexico has opened itself to private investment from foreign companies in recent years, but that is under threat.
The decision to invest in Mexico comes days before the country’s July 1 presidential election, when leftist candidate Andrés Manuel López Obrador is expected to win. He has threatened to roll back constitutional reforms from 2013 that opened Mexico’s formerly nationalized energy industry to foreign investment.
Perry, in response to a question from the Washington Examiner, said he’s unconcerned about U.S. energy investment in Mexico being hit by interference. He said he sees Mexico in particular being a prime export market for U.S. natural gas, as more pipelines are built.
“Regardless of who was or will be the next president of Mexico, they are our neighbor,” Perry said. “They aren’t moving. The resources will be there. The need to develop those resource will be there. I have complete confidence whether it is Mr. Obrador or some other candidate, regardless of your political leanings, you’re going to need resources to address the needs of your countries and citizens. Mexico is going to be very willing to work with private sector partners in the U.S., and continuing as a good neighbor.”
