Natural gas: the fuel of war…

The scramble for natural gas resources has intensified markedly between Asia and Europe following Russia’s incursion into Ukraine in February 2022. This military conflict has upended European gas markets and propelled energy prices to unprecedented levels. The situation has exacerbated geopolitical strains and underscored the critical importance of energy independence for both continents.

In response, there has been a profound shift in the global natural gas trade, with Europe emerging as a key importer of liquefied natural gas (LNG), notably from the United States.  The development has sent ripples through the established Latin American markets and the burgeoning Asian economies, altering global energy supply and demand balance.

Why does life bother me so much?

For many, the enchanting figure of Alain Fabien Maurice Marcel Delon lingers in their minds. Born on November 8, 1935, in the affluent suburb of Sceaux, France, just a stone’s throw from Paris, Delon was nothing short of a phenomenon. “Le Magnifique” had a magnetic charm that left both men and women spellbound, their hearts racing in pursuit of his striking allure. Ordinary folks would marvel, exclaiming, “What luck! What a wonder!”

Yet, beneath the surface of this iconic actor and heartthrob lay a man burdened by the weight of his own fame. The relentless adoration from fans spiralled him into a deep melancholy, leading him to contemplate the unthinkable as he navigated the tumultuous waters of his existence. In a twist of fate, he turned away from his fervent admirers, showing his affection to the street animals—dogs, cats, or even the forsaken elephants trapped in cruel circuses.

Despite seemingly having it all, Le Magnifique was a labyrinth of contradictions, often displaying a prickly demeanour. His complex nature was further complicated by his homophobic views and ultra-right beliefs, which sparked controversy and intrigue alike.

The brilliant Pilar Eyre, a Spanish writer, journalist, blogger, and YouTuber, has a tale that encapsulates the essence of this enigmatic actor. In a revealing interview in Barcelona in 1996, Delon shared stories of his escapades, offering a glimpse into the multifaceted personality that was both captivating and confounding.

Today’s headlines …

(NYT) Mexico’s President Bet Big on Oil. His Successor Will Be Stuck With the Tab

Mexico’s next leader, Claudia Sheinbaum, is a climate scientist who has signaled a clean energy pivot. But a huge wager on fossil fuels by her political mentor stands in her way.

Why Mpox Vaccines Aren’t Flowing to Africans in Desperate Need

Drugmakers have supplies ready to ship that are necessary to stop a potential pandemic. But W.H.O. regulations have slowed access.

(POLITICO EU) WHO calls for $135M to combat mpox outbreak

The World Health Organization has warned that more money will be needed in future.

(EL País) Islamic State claims three dead in attack in Germany

The terrorist group claims that the stabbing was “in revenge for the Muslims in Palestine and everywhere”. Police arrest a 15-year-old boy in connection with events at a festival.

Natural gas prices significantly dropped in the first quarter of 2024, attributed to a mild winter.  However, a rebound occurred by mid-June, with natural gas prices in the United States surging by 80% and European prices by 25% compared to March’s average.  By early August, Spain’s electricity prices soared to €150 per megawatt-hour, spreading concern.

The struggle for natural gas resources between Asia and Europe has intensified due to the Russian invasion of Ukraine in February 2022.  Russia’s military incursion has significantly disrupted European gas markets, substantially increasing energy costs.  The conflict has brought geopolitical tensions to the forefront and underscored the critical importance of energy security for both regions.

This conflict has reoriented global natural gas flows, the most significant being the shift from the United States to Europe, which has emerged as a primary importer of liquefied natural gas.  It has also affected the traditional Latin American and burgeoning Asian markets.

At this point, it is worth pausing to reflect on this powerful natural element, which requires unusual freezing at a temperature of -160º Celsius to complete its remarkable transformation from gas to liquid, enabling its transportation.  The fuel sparks economic battles and bloody wars and, regardless of one’s views on it, remains an indisputable pillar of modern existence.

The current natural gas prices at the Henry Hub Spot are significantly lower than their historical maxima.  For instance, the price reached US$18.92 in December 2000, reached US$18.54 in February 2003, peaked at US$23.45 in September 2005, and rose to US$18.93 in June 2008.  As of August 2022, the price is US$9.47 per million British thermal units (MBTUs).

A second echo is expected. The recent Ukrainian military incursion into Russian territory was deemed absolutely necessary to secure the natural gas supplying Europe, marking a significant development.   This strategic action carries major implications for regional energy dynamics, leading to a geopolitical transformation of the increasingly uncertain global natural gas market.

Happy Sabbath!  We hope you’re enjoying this day filled with peace and joy.  It’s a time for relaxation, reflection, and recharging, surrounded by your loved ones.  May your day be enriched with warmth and meaningful moments that forge lasting memories.  

For many, the memories of Alain Fabien Maurice Marcel Delon persist.  Delon was born on November 8, 1935, in Sceaux, France, a wealthy suburb of Paris.  “Le Magnifique” captivated both men and women who pursued him fervently and ardently, entranced by his exceptional beauty.  Ordinary people would exclaim, “What fortune!  What marvel!”  

Yet, this man, an actor and sex symbol who did not regard himself as such, was troubled by their incessant adoration, which caused him colossal depression.  Such dissatisfaction with life, which came to ask for euthanasia in the twilight of his torrid journey through life.  In an ironic twist, he shunned his ardent admirers, opting to bestow his love upon the street animals—whether they be dogs, cats, or even the neglected elephants of cruel circuses.  

Le Magnifique, perhaps for possessing everything, was a complex man with an uncomfortable and disagreeable character.  He was also known for his homophobic tendencies and ultra-right views.  His complexity, which often led to controversy, is a significant part of his character. 

Perhaps Pilar Eyre, a wise and wonderful Spanish writer, journalist, blogger, and YouTuber now, has an anecdote that perfectly describes the personality of the actor.  Delon told of his adventures in an interview he gave her in Barcelona in 1996. 

The portrayal of the sincere, unfiltered, and timely character of the legendary actor, who stands as a titan in the annals of global cinema, unveils the myriads of struggles that Delon battled.  This was all because he was not just a star but the epitome of charm and allure during a remarkable era in film history. 

Yet, amidst all this turmoil, a deep well of bitterness and sorrow brewed within him regarding his interactions with his kin and outsiders.  Overwhelmed by the weight of existence and the allure of his charm, he found a moment of twisted solace.  He uttered a most peculiar compliment to the enchanting Ms Eyre: —-“How fortunate you are to be devoid of beauty…” 

Well, Ms Eyre has bravely weathered Mr Delon’s fiery praise, while the actor now finds himself in the twilight of his days, surrounded by his 45 beloved canine companions.  But the enigmatic actor departed this world, leaving behind an unfulfilled desire that stirred quite the debate.  Mr Delon’s family turned down his heartfelt plea to have his beloved dog, Loubo, put to sleep and laid to rest by his side, especially after the uproar it sparked across France.  In a candid chat with Paris Match back in 2018, he shared the poignant bond he had with Loubo, whom he cherished “like a child” during the dog’s twilight years.  Indeed, every mind is a mysterious universe, filled with unspoken wishes and untold stories…

Gratitude is a vital aspect of our existence…

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“When I joined in 2011, AES was in almost 30 countries and had development activities in several more. We decided that we were going to focus on fewer markets but focus more intensively on them.  This is because we wanted to have a critical presence in those countries. Today, we are in 12 countries as an operator, but we are doing much more in those countries than we were previously. We are now one of the five largest renewable developers in the world outside China, and we are leaders in several technologies. 

In addition to expanding our geographic footprint, we are also focused on improving our credit rating and our risk profile. We tackled risk across the board because there are many aspects to risk.  In addition to the geographies, it involves the type of technology you have, and commodity exposures because we are mostly a big generator. We are known as independent power producers, so we may be exposed to technology and commodity changes. We made sure that in areas we could not hedge it financially, we would bring in the technology to decrease that risk. In Panama, we had almost 800 megawatts of hydro, but we were extremely dependent on the weather.  Our business is contracted generation, so we had to supply energy at $80 a megawatt-hour to our clients. In years of drought, we would have to buy in the market.  For example, there was a severe drought in Panama in 2014, and we lost $100 million as a result. We were buying energy at $300 a megawatt-hour to supply a contract at $80 per hour. Our first move was to float in a barge, and that produced thermal energy.  However, it is relatively expensive and relatively small.  We built an LNG regasification terminal and storage facility in Panama and an efficient combined-cycle plant. While the drought was just a bad this year, our losses are going to be marginal. This is because the price of energy is essentially capped at $120 a megawatt-hour.  This is not only good for us, but it is great for Panama.  The U.S. is going to be a big producer of natural gas, and it has sufficient liquefaction facilities.  This has greatly helped countries in this area of the world. For example, by bringing in cheap LNG to the Dominican Republic, the country typically saves about half a billion dollars in its annual import bill. This is a much more stable price than oil prices.  This allows the countries to develop industries such as tourism and services, so it is a win-win. Bringing in these new technologies has been extremely exciting…

  https://www.forbes.com/sites/peterhigh/2019/12/09/how-the-ceo-of-a-major-energy-producer-is-reducing-his-companys-reliance-on-coal/

Natural gas prices significantly dropped in the first quarter of 2024, attributed to a mild winter.  However, a rebound occurred by mid-June, with natural gas prices in the United States surging by 80% and European prices by 25% compared to March’s average.  By early August, Spain’s electricity prices soared to €150 per megawatt-hour, spreading concern.

The struggle for natural gas resources between Asia and Europe has intensified due to the Russian invasion of Ukraine in February 2022.  Russia’s military incursion has significantly disrupted European gas markets, substantially increasing energy costs.  The conflict has brought geopolitical tensions to the forefront and underscored the critical importance of energy security for both regions.

This conflict has reoriented global natural gas flows, the most significant being the shift from the United States to Europe, which has emerged as a primary importer of liquefied natural gas.  It has also affected the traditional Latin American and burgeoning Asian markets.

At this point, it is worth pausing to reflect on this powerful natural element, which requires unusual freezing at a temperature of -160º Celsius to complete its remarkable transformation from gas to liquid, enabling its transportation.  The fuel sparks economic battles and bloody wars and, regardless of one’s views on it, remains an indisputable pillar of modern existence.

The current natural gas prices at the Henry Hub Spot are significantly lower than their historical maxima.  For instance, the price reached US$18.92 in December 2000, reached US$18.54 in February 2003, peaked at US$23.45 in September 2005, and rose to US$18.93 in June 2008.  As of August 2022, the price is US$9.47 per million British thermal units (MBTUs).

A second echo is expected. The recent Ukrainian military incursion into Russian territory was deemed absolutely necessary to secure the natural gas supplying Europe, marking a significant development.   This strategic action carries major implications for regional energy dynamics, leading to a geopolitical transformation of the increasingly uncertain global natural gas market.

Andriy Prokip is an energy specialist at the Ukrainian Institute for the Future in Kyiv and a senior associate at the Kennan Institute in Washington, D.C. Andreas Umland serves as a senior expert at the Ukrainian Institute for the Future in Kyiv and is a researcher at the Swedish Institute of International Affairs in Stockholm. Together, they wrote an article for the Harvard International Review titled “The Forgotten Potential of Ukraine’s Energy Reserves,” published on October 10, 2020, just 14 months before Russia invaded Ukraine. The natural gas market in Eurasia is comprehensively documented in this exceptional piece, available in this edition.

“The Forgotten Potential of Ukraine’s Energy Reserves”

The European energy supply has increasingly become a geopolitical issue in recent years. It is closely linked to security concerns and competition between gas transportation routes, and the ongoing tensions between Ukraine and Russia. In late 2019, Kyiv secured a new and favorable transit agreement with Moscow for the transportation of Siberian gas to the European Union. The agreement was partly a response to new U.S. sanctions targeting Russia’s offshore pipeline projects.

The five-year agreement ensures the ongoing utilization of a portion of Ukraine’s extensive gas transportation system. If Gazprom’s Nord Stream II pipeline through the Baltic Sea does not proceed, the Ukrainian gas transportation system will have potential for continued use and revenue generation.

However, these prominent confrontations and negotiations regarding various routes for Russian gas supply to the European Union have overshadowed the potential of Ukraine’s gas and oil reserves, as well as its associated storage facilities. The significant natural resources within Ukraine’s energy sector remain largely unexplored and underutilized, despite the fact that their development could stimulate economic growth in both the energy sector and other industries.

Untapped Potential…

Ukraine currently possesses the second-largest natural gas reserves in Europe, excluding Russia’s reserves in Asia. As of late 2019, the known reserves in Ukraine totaled trillion cubic meters of natural gas, second only ranking just behind resources of 1.53 trillion cubic meters. This abundance, if effectively harnessed, of these wealth reserves, if reserves Ukraine’s transform sector and significantly contribute, plays a crucial role in enhancing independence and the economy and fostering

Despite this optimistic situation, Ukraine remains significantly reliant on gas imports. When the USSR initiated large-scale gas extraction in Western Siberia during the 1970s, much of the relevant expertise and capacity in Soviet gas exploration and production was transferred from the Ukrainian Soviet Republic to the Russian Soviet Republic and several other Eastern European states. Consequently, as a result of this outflow of expertise, Ukraine’s remaining gas resources are still underdeveloped, vastly underutilized, and partially unexplored.

Until recently, Ukraine’s total average annual consumption was approximately 29.8 billion cubic meters (bcm). Of this entire yearly total approximately 14.3 demand, around imports. bcm was met through imports. Therefore, tapping into its untapped reserves could transform the future its energy consumption.

The resolute development of the already explored and accessible Ukrainian resources could significantly increase gas production. This enhancement would enable the country to fully meet its domestic gas needs and achieve a high degree of energy self-sufficiency. In an optimal scenario, increased production could allow Ukraine to export gas to or through neighboring European countries. This is feasible due to Ukraine’s extensive gas transportation system, which provides the necessary infrastructure to deliver substantial quantities of gas to the European Union. With appropriate investments and strategic policy decisions, Ukraine could emerge as a key gas exporter to the EU, offering a reliable alternative to the current dominant suppliers and bolstering its geopolitical position.

According to some estimates, the European Union (E.U.) will import approximately per percent gas it consumes by 2030. In this context, smaller or prospective gas exporters like exporters, such as Ukraine, attractive increasingly appealing in Brussels. With its vast reserves substantial strategic location, Ukraine has the potential to significantly diversify the origins and sources of the European gas supply, thereby strengthening the enhancing negotiating E.U.’s and its own role in the energy market.

Despite the significant potential of Ukraine’s energy reserves, there are substantial costs associated with developing the country’s capabilities. According to an assessment study by study conducted Ukrainian Institute for the future, a Future, transforming a self-sufficient energy consumer and potential and a would require several investments to totaling billion. Of this amount, about US$3.5 around is needed for developing gas the development of and building pipelines, the construction of billion would have must into oil in and US$2 billion would go will be allocated for

The total investment required to achieve complete energy independence is substantial when compared to Ukraine’s relatively modest state budget and GDP. However, this amount is roughly equivalent to the costs of current energy imports over a period of two to three years. Therefore, despite the high absolute cost, it would be recouped relatively quickly.

Moreover, financial investment in Ukraine’s energy sector is becoming increasingly attractive. In recent years, Ukraine has gradually reduced distortive government interventions in the gas market, often under pressure from the International Monetary Fund (IMF). Kyiv has implemented market pricing for households and has ceased providing subsidies to all consumers indiscriminately. This relatively new domestic market, combined with the anticipated recovery of European energy markets following the COVID-19 pandemic, is expected to make financial engagement in Ukrainian gas production and exploration more appealing than in the past. Consequently, the investment climate is likely to continue improving.

The Road Ahead…

Ukraine’s gas transportation system will continue to play a vital role in the future of the country’s energy sector. Ukraine possesses one of the most well-developed and comprehensive gas transportation infrastructures in the world, facilitating both domestic deliveries and export capabilities. The Ukrainian gas transit system is a legacy of the Soviet energy expansion into Europe, partially resulting from the German Neue Ostpolitik (New Eastern Policy) of the 1970s. For a long many years, the served as corridor primary transferring Soviet transporting Soviet, and later Central Asian gas to gas, European states. The nations. Currently, the utilization capacity is much lower significantly a than it was earlier due ago, primarily the completion of the first Nord Stream pipeline in 2012, the growing introduction increasing adoption energy resources, and the current economic ongoing however, downturn. Nevertheless, and compressor stations are still remain operational significant possess substantial merely delivering Russian or Turkmen gas to the E.U. European Union.

A significant component of Ukraine’s multidimensional gas infrastructure is its extensive underground gas storage facilities. Currently, these facilities are only partially utilized, with a total storage capacity exceeding 31 billion cubic meters (bcm) of natural gas. fully exploited, Ukraine could hypothetically potentially increase its storage capacity by nearly to of 100 bcm of storage space held by European Union (E.U.) hold. states. Consequently, surprise that not surprising consultancy Wood Mackenzie recently suggested that Ukraine holds the indicated to Europe’s could play a crucial role in alleviating As result gas storage crisis. COVID-19 pandemic, world gas prices plummeted, but global E.U.’s storage experienced a sharp decline; however, not have enough space lack sufficient capacity the fully capitalize on this about investing address foreign investors’ the country adopted some amendments to relevant implemented several directives in late 2019—regulatory modifications that make it 2019. These regulatory changes facilitate foreign firms’ access In during the first nine months of 2020, foreign energy firms pumped 7.9 bcm of gas to companies injected storage, several times higher into the volume storage, a volume foreign gas greater in Ukraine amount 2019. the country 2019. Reason: Improved clarity, vocabulary, and technical accuracy while correcting grammatical and punctuation errors.

Hydrogen represents a new frontier for Ukraine’s underdeveloped energy sector. Currently, several gas distribution companies are assessing Ukraine’s pipeline capabilities to adapt existing infrastructure for the delivery of hydrogen to their customers. The European Union has recognized Ukraine as a priority partner for future collaboration in using hydrogen utilizing enhance the strengthen energy supply and security.

However, another energy source with significant potential in Ukraine is biogas. Currently, the country can produce approximately 10 million cubic meters of biogas annually, a volume roughly equivalent to the amount of natural gas that Ukraine imports each year. Given the growth of Ukraine’s agricultural sector, its capacity to produce biogas may increase further. This potential is quite sustainable: blending biogas with hydrogen produces biomethane, an environmentally friendly energy source that is free of carbon dioxide.

Boosting Ukraine’s domestic production of natural gas, biogas, hydrogen, and biomethane would not only reduce or potentially eliminate Ukraine’s dependence on energy imports but also establish a new and dynamic export-oriented sector within the Ukrainian economy. This initiative would stimulate more robust growth across various other sectors. Simultaneously, the European Union would benefit from diversifying its gas supply sources and gaining a new primary energy partner in its immediate vicinity. Furthermore, such cooperation would strengthen Brussels’ economic ties with Kyiv and diminish the need for ongoing Western support for the Ukrainian state. A concerted effort to develop Ukraine’s untapped reserves for the production, export, and storage of energy would serve the interests of all parties involved.

Mexico’s President Bet Big on Oil. His Successor Will Be Stuck With the Tab…

Mexico’s next leader, Claudia Sheinbaum, is a climate scientist who has signaled a clean energy pivot. But a huge wager on fossil fuels by her political mentor stands in her way.

NYT, Simon Romero, a journalist with extensive experience in Latin American affairs, has reported on energy politics from various postings, including Venezuela and Brazil. This article was filed from Mexico City.

On a sweltering day in August, Claudia Sheinbaum appeared with her mentor, President Andrés Manuel López Obrador, to inaugurate one of the costliest infrastructure projects in Mexico’s history: a $16 billion oil refinery.

The sprawling complex in Mr. López Obrador’s home state, Tabasco, forms the capstone of an energy strategy that he will bequeath to Ms. Sheinbaum, a climate scientist, when she takes the presidency in October.

As countries around the world feverishly turn to clean energy sources, Mexico has placed a colossal bet on fossil fuels, with the costs of that strategy now coming painfully into view.

Mexico’s oil production tumbled to a 45-year low this year, one of the steepest output declines anywhere in the world this century. Blackouts plagued the country after Mr. López Obrador heaped scorn on wind farms that could help satisfy electricity demand. Natural gas imports for the strained grid are soaring, making energy independence an ever more distant dream.

Pemex, the state-controlled oil giant, is now the world’s most indebted oil company after going on a spending spree to build projects. To stave off a default on its nearly $100 billion debt, the company has required multibillion-dollar bailouts using taxpayer money.

The disorder in Mexico’s energy industry lays bare a dilemma that will shape the country’s fortunes — and Ms. Sheinbaum’s presidency — in the years to come. Ms. Sheinbaum, who has a Ph.D. in energy engineering, has signaled that she wants Mexico to pivot to clean energy sources. But the biggest obstacles in her way may be her mentor’s nationalistic energy policies that are fixated on oil — and her reluctance to bump heads with the man who helped put her in office.

“It’s a source of pride to see how Mexican engineers and workers have achieved this feat,” Ms. Sheinbaum said at the refinery’s inauguration.

She barely mentioned her own plans for an energy transition at the event. Instead, Ms. Sheinbaum voiced full-throated support for Mr. López Obrador’s oil-centric policies, calling the refinery, named Olmeca, “majestic,” while blasting previous leaders for exporting Mexico’s oil and opening the energy industry to private investment.

But the refinery, intended to tilt Mexico toward energy self-sufficiency by processing the country’s crude oil into gasoline instead of relying on U.S. refineries, remains far from fully operational, according to the International Energy Agency. Beset by delays and cost overruns, Mr. López Obrador already inaugurated the project once before, in 2022, when it was supposed to start operating in 2023.

Altogether, the Olmeca refinery doubled in cost from its initial $8 billion budget, adding to the financial pressure on Pemex. The company owes financial creditors almost $100 billion, and billions more to service providers that help the company produce oil. Delays in paying these companies led some to halt work this year for Pemex, contributing along with underinvestment in exploration to declining output.

“In one word, it is unsustainable,” Adriana Eraso, a Latin American corporate analyst at Fitch Ratings, said about Pemex’s strain under its debt load.

Neither Ms. Sheinbaum nor Mr. López Obrador responded to requests for comment. Pemex’s leadership also did not respond.

Hints emerged on the campaign trail of Ms. Sheinbaum’s energy plans before she won in a landslide in June. They include building solar plants, pushing Pemex into mining the lithium used in electric vehicle (E.V.) batteries and constructing charging infrastructure for E.V.s.

Ms. Sheinbaum has also proposed a cap on Pemex’s oil production, a change in course that would involve chipping away at one of modern Mexico’s foundational myths, dating to the country’s 1938 nationalization of its oil resources: that Mexico is an oil power, with oil at the core of the economy.

“When I talk to people in my social circle, they tend to believe Mexico continues to be an important oil-producing country,” said Adrián Duhalt, an energy expert at Rice University, citing relatives and friends who work at or have retired from Pemex. “That’s no longer the case when you look at the numbers.”

In the early decades of the 20th century, Mexico was the world’s largest oil exporter. But the country’s crude oil production plunged from 3.2 million barrels a day at the start of this century to about 1.5 million, largely reflecting underinvestment in exploration. While Mexico still exports some crude oil, the country must import everything from natural gas and diesel to jet fuel.

As a result, Mexico’s clout in global energy markets has dwindled as other countries in the Americas — the United States, Guyana and Brazil — rise in prominence. Mexico’s crude oil output is now dwarfed by that of the state of New Mexico, which alone produces two million barrels a day with a population about one-sixtieth the size of Mexico’s.

And yet, schoolchildren still learn about the nationalization of oil in textbooks. Monuments celebrate state control of the oil industry, and polls show broad resistance to any hint of privatizing Pemex. A national holiday on March 18 commemorates the day in 1938 when a leftist president took control of foreign-owned oil assets.

Mr. López Obrador adroitly embraced oil nationalism upon taking office in late 2018, casting attempts by the previous government to open the energy industry to meaningful foreign investment as a sellout.

Prioritizing fossil fuels, he publicly mocked wind turbines after his government canceled auctions for solar projects. His supporters point out political reasons for making such a huge bet on oil.

Octavio Romero, Pemex’s chief executive, contends that Mexico had to pursue costly refinery projects for national security reasons because of the country’s reliance on imports of refined fuels from the United States.

“What happens if for some reason, political or natural disaster-related, the ports for importing gasoline are closed?” Mr. Romero told reporters in April.

Still, the costs of propping up Pemex are climbing. Altogether, Mexican authorities have granted Pemex the staggering amount of at least $70 billion in relief in the form of capital injections and tax breaks since 2019, reflecting how Pemex has gone from providing the bulk of government revenues to requiring repeated bailouts.

Pemex, for its part, remains known for retaining privileges like its own country clubs, hospitals and schools. Some executives enjoy perks like enviable pensions and tuition reimbursement at private universities for their children.

Some argue that the government should withdraw its support for Pemex and let it default, contending that at the moment, the country’s relatively resilient economy could absorb the aftershocks.

Damian Fraser, a former country manager in Mexico for the Swiss banking giant UBS, said that if the authorities did not act now, a default by Pemex down the road could unleash economic chaos by raising borrowing costs for a constellation of companies in a country that has eclipsed China as the largest trading partner of the United States.

“If there is ever a time to let bondholders take a hit on Pemex, this might be it,” said Mr. Fraser, who now runs Miranda Partners, which advises companies on doing business in Mexico. “The government is mainly bailing out oil workers and Wall Street at the cost of expanding Mexico’s social programs.”

But for Ms. Sheinbaum — or any Mexican leader for that matter — withdrawing support for Pemex could also be extremely unpopular. So far, she has made it clear that she has no plans to let Pemex default, seeking instead to refinance Pemex’s debt in hopes of freeing up resources to shift toward clean energy sources.

Ms. Sheinbaum laid out some of her plans on March 18, the 86th anniversary of Mexico’s oil expropriation, framing them as a way to bolster Pemex, keep imported energy at a minimum and avoid increasing energy prices beyond inflation.

She said she would cap Pemex’s oil production at 1.8 million barrels a day, not far from what it is now producing, as a way of “decoupling” energy consumption from economic growth by focusing on clean energy and improvements in energy efficiency.

“The growth in demand must be absorbed by renewable energy sources,” Ms. Sheinbaum said.

Still, specifics remain sparse as to how Ms. Sheinbaum would carry out such a shift, especially at a time when her financial maneuvering room will be limited. Another legacy from Mr. López Obrador will be a budget deficit nearing 6 percent of gross domestic product, the largest shortfall in the past 24 years. Pemex’s debt alone stands at about an additional 6 percent of G.D.P.

The resource nationalism imbuing Mexican politics also raises questions as to how far Ms. Sheinbaum will be able to go in a country where oil remains central to national identity.

“People can’t really rally around lithium like they can around oil,” said Lisa Breglia, a scholar at George Mason University who specializes on Mexico’s oil industry. “Down to Mexico’s last drop of oil, people will still take to the streets.”