{"id":4287,"date":"2021-12-16T07:45:00","date_gmt":"2021-12-16T07:45:00","guid":{"rendered":"https:\/\/www.declassifieduk.org\/?p=4287"},"modified":"2023-05-17T15:10:35","modified_gmt":"2023-05-17T14:10:35","slug":"britains-75-million-aid-project-to-open-up-mexican-oil-to-uk-business","status":"publish","type":"post","link":"https:\/\/www.declassifieduk.org\/britains-75-million-aid-project-to-open-up-mexican-oil-to-uk-business\/","title":{"rendered":"Britain\u2019s \u00a375 million aid project to open up Mexican oil to UK business"},"content":{"rendered":"\n

The UK programme, lasting from 2017 until 2023, is run through the Foreign Office\u2019s Prosperity Fund, which claims<\/a> to promote \u201cinclusive economic growth needed to reduce poverty in partner countries\u201d. Its budget is \u00a374.5m<\/a>. <\/p>\n\n\n\n

But government project documents<\/a> point to \u201cprosperity interventions\u201d that \u201cwill open up new markets\u201d with \u201cUK business able to benefit\u201d. <\/p>\n\n\n\n

The project began as Mexico was awarding contracts to private companies in its oil industry for the first time since the 1930s. <\/p>\n\n\n\n

The UK government states that \u201cthe entire programme is structured to ensure we drive and take advantage of secondary commercial benefits for…UK businesses, arising from this [aid] activity.\u201d It adds \u201cthere is a need to supercharge\u201d trade relations \u201cwith the effective use of [aid] funds to open new markets\u201d. <\/p>\n\n\n\n

One of the programme\u2019s aims<\/a> is to help build \u201ca new regulatory environment following de-nationalisation of the electricity, and oil and gas markets\u201d. This would help \u201cdeliver full potential impact of reforms to the wider economy\u201d. <\/p>\n\n\n\n

Britain is well-placed to help Mexico in this process because of its \u201cexperience of energy sector privatisation and market liberalisation.\u201d The UK is a \u201cworld leader on deep-water oil and gas extraction\u201d, it adds. <\/p>\n\n\n\n

\"Prime
Prime minister David Cameron welcomes Mexico\u2019s President Enrique Pe\u00f1a Nieto to 10 Downing Street to sign a joint declaration, 4 March 2015. (Photo: UK government)<\/figcaption><\/figure>\n\n\n\n

British oil majors BP and Shell are closely linked to the UK Foreign Office and have since 2017 won big hydrocarbon contracts from the Mexican government. <\/p>\n\n\n\n

Public relations material claims<\/a> the project\u2019s top priority is helping businesses and government  support Mexico\u2019s transition to a low carbon economy. But programme documents say the UK government will \u201csupport\u201d the Mexican government to fulfil its \u201cambition\u201d to \u201cincrease oil production\u201d. <\/p>\n\n\n\n

According to the World Bank<\/a>, Mexico is \u201chighly vulnerable\u201d to the adverse impacts of climate change.<\/p>\n\n\n\n

British business also stands to profit from this. Documents released to Declassified<\/em> show that the UK embassy in Mexico City spent \u00a35,317 in 2018-19 to \u201cshowcase the UK\u2019s private sector expertise in managing catastrophic risk\u201d. This resulted in Mexico\u2019s \u201cpreparation for the opening up of federal disaster insurance to UK insurers\u201d. <\/p>\n\n\n\n

Changing the law<\/strong><\/h2>\n\n\n\n

Britain\u2019s \u201cprosperity\u201d aid programme in Mexico is divided into four strands, but the energy strand is more than double<\/a> the size of the others.<\/p>\n\n\n\n

The UK government states<\/a> that Mexico\u2019s energy industry needs particular focus because it has  limited capacity to exploit its extensive oil and natural gas reserves. It adds that Mexican Petroleum (Pemex), the state-run oil company that is the largest player in the oil and gas sector, \u201cdoes not have sufficient resources and capabilities to take advantage\u201d.<\/p>\n\n\n\n

The programme will promote \u201cniche areas where relatively small interventions can have a \u2018leverage effect\u2019 via changes in legislation\u201d. <\/p>\n\n\n\n

The UK government notes that the project has so far been successful. It states that \u201cour work has helped Mexico\u2026reform its energy sector incorporating best practice on energy regulation and auction processes.\u201d It adds: \u201cIn this we can draw on synergies with other UK funds in Mexico\u2026.where UK companies are also well placed in these fields.\u201d<\/p>\n\n\n\n

Other British diplomacy has also helped UK companies take advantage of Mexico\u2019s oil liberalisation. As the aid project began in 2017, the Lord Mayor of London, the top official of the City of London, visited Mexico and said he was \u201cparticularly impressed by the successful liberalisation of the energy sector to foreign participants\u201d. <\/p>\n\n\n\n

He added: \u201cWith Mexico looking to invest billions of dollars in new infrastructure\u201d including \u201cthe exploitation of the oil and gas reserves in the Gulf of Mexico, there was a strong interest in the City\u2019s offering as a global financial hub with the capacity to help plan and finance these projects.\u201d<\/p>\n\n\n

\n

RELATED<\/h3>\n
\n
\n \n \"\"\n <\/a>\n <\/div>\n
\n

Revealed: UK Foreign Office has spent nearly half a million...<\/h2><\/a>\n READ MORE <\/i><\/a>\n <\/div>\n <\/div>\n<\/div>\n\n\n\n

Privatisation<\/strong><\/h2>\n\n\n\n

The Mexican oil industry has been run by state-owned Pemex since 1938 when President L\u00e1zaro C\u00e1rdenas expropriated<\/a> nearly all the assets of foreign oil companies operating in the country. <\/p>\n\n\n\n

Before, the oil industry had been dominated<\/a> by the Mexican Eagle Company, a subsidiary of Shell, which accounted for over 60% of Mexican oil production. <\/p>\n\n\n\n

After nationalisation, the British feared<\/a> a \u201cnationalist contagion\u201d spreading to other oil producing countries such as Venezuela and Iran. <\/p>\n\n\n\n

Whitehall was \u201ceffectively<\/a> a mouthpiece for the interests of Royal Dutch Shell\u201d and took an antagonistic position towards the C\u00e1rdenas government\u2019s nationalisation. The UK boycotted Mexican oil exports and broke off diplomatic relations. <\/p>\n\n\n\n

In an historic series of legislative moves in 2013-14, president Enrique Pe\u00f1a Nieto ended<\/a> Pemex\u2019s monopoly on oil exploration and production rights, opening up the industry to private operators for the first time in 75 years. <\/p>\n\n\n\n

Two years later, in 2016, BP participated<\/a> in Mexico\u2019s first tender for deepwater licences, winning interests in two exploration blocks in Mexican waters. <\/p>\n\n\n\n

In March 2017, as the UK aid project began, BP unveiled<\/a> its first fuel retail site in Mexico, becoming the first foreign company to enter the market. By the end of the year it had opened 100<\/a>. \u201cMexico is one of the key growth markets for BP,\u201d said a company official.<\/p>\n\n\n\n

\n

\u201cMexico is one of the key growth markets for BP,\u201d said a company official.<\/p>\n<\/blockquote>\n\n\n\n

By 2020, BP said its fuel stations were serving more than 700,000 customers daily, with more sites than any other brand, apart from state-owned Pemex.<\/p>\n\n\n\n

“We are very happy with the results obtained so far. We were the first international company to enter the gasoline market in Mexico,” said the general director of BP fuels, Alvaro Granada. <\/p>\n\n\n\n

The company added: \u201cA thriving industry, coupled with the decision by the Mexican Government to deregulate the fuels market in 2013, makes Mexico an attractive option for foreign investment.\u201d<\/p>\n\n\n\n

Meanwhile, in 2018, the other British oil \u201csupermajor\u201d, Shell, snapped up nine of 19 Gulf of Mexico oil and gas blocks awarded in a Mexican auction. Two years later, in 2020, it opened its 200th petrol station in Mexico. <\/p>\n\n\n\n

The Foreign Office refused to answer Declassified<\/em>\u2019s questions about whether it had any contact with these oil companies in the context of its Mexico aid programme.<\/p>\n\n\n

\n

RELATED<\/h3>\n
\n
\n \n \"\"\n <\/a>\n <\/div>\n
\n

Conservative Party donors and the battle for offshore oil claimed...<\/h2><\/a>\n READ MORE <\/i><\/a>\n <\/div>\n <\/div>\n<\/div>\n\n\n\n

The contractor<\/strong><\/h2>\n\n\n\n

The UK government contract for the energy programme in Mexico was awarded to Development Alternatives Incorporated (DAI), a US company that is a major contractor for the British and American governments.<\/p>\n\n\n\n

DAI announced<\/a> in 2019 that it would serve as Shell\u2019s \u201cglobal advisor\u201d to help enterprises connect with Shell\u2019s local value chain and markets in 18 countries. <\/p>\n\n\n\n

CIA whistleblower Philip Agee said<\/a> in 2006 that DAI acts as one of the \u201cmechanisms of the US embassy\u201d around the world. <\/p>\n\n\n\n

The closeness of the DAI to US embassies around the world is illustrated in diplomatic cables published<\/a> by WikiLeaks. <\/p>\n\n\n\n

One US cable<\/a> from Sudan notes that DAI is \u201can assistance partner under USAID’s Office of Transition Initiatives’ (OTI)\u201d and was contracted to \u201cimplement a small grants program in Sudan to help create space for peaceful political change\u201d. <\/p>\n\n\n\n

The OTI is a specialised branch of USAID that is \u201ctargeted<\/a> at key political transition and stabilization needs\u201d, managing funds destined for organisations favourable to Washington in countries undergoing political crises.<\/p>\n\n\n\n

The Sudanese government moved to prosecute DAI, claiming it was \u201csupporting opposition activities aimed at destabilizing the government, as well as directing activities against the internal security of the state\u201d. <\/p>\n\n\n\n

In 2011, a DAI worker was arrested<\/a> in Cuba on a covert \u201cdemocracy project\u201d which provided \u201cCuba\u2019s Jewish community with communication equipment for wireless Internet connectivity\u201d. <\/p>\n\n\n\n

The US embassy has long pushed for Mexico to privatise its oil. When Mexico\u2019s president Calderon touted a privatisation proposal in July 2008, the US embassy advised<\/a> Washington: \u201cfrom now until President Calderon signs something into law, the Embassy strongly recommends that all [US government] officials remain quiet and enjoy the show.\u201d<\/p>\n\n\n\n

\u200b\u200bA Foreign Office spokesperson told Declassified<\/em>: \u201cThe UK\u2019s Prosperity Fund is working to tackle some of the market barriers that hold back Mexico\u2019s ability to transition to a low-carbon economy.\u201d<\/p>\n\n\n\n

Development Alternatives Inc. said it could not answer any questions related to its Mexico contract without consulting with the client, the UK Foreign Office, which did not respond to them. BP and Shell did not respond to requests for comment.<\/p>\n","protected":false},"excerpt":{"rendered":"

The UK programme, lasting from 2017 until 2023, is run through the Foreign Office\u2019s Prosperity Fund, which claims to promote \u201cinclusive economic growth needed to reduce poverty in partner countries\u201d. Its budget is \u00a374.5m.  But government project documents point to \u201cprosperity interventions\u201d that \u201cwill open up new markets\u201d with \u201cUK business able to benefit\u201d.  The […]<\/p>\n","protected":false},"author":5,"featured_media":4330,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","om_disable_all_campaigns":false,"footnotes":""},"categories":[15,234,135,7],"tags":[129,256],"coauthors":[185],"acf":[],"yoast_head":"\nBritain\u2019s \u00a375 million aid project to open up Mexican oil to UK business<\/title>\n<meta name=\"description\" content=\"The UK government is using aid to help British business capitalise on Mexico\u2019s privatisation of its oil industry, while claiming it is helping the country transition to a \u201clow carbon\u201d economy.\" \/>\n<meta name=\"robots\" content=\"index, follow, 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