Mexico City — Juan Carlos Zepeda Molina, the head of Mexico's National Hydrocarbon Commission (CNH), has resigned to make way for new leadership, but will continue to help the country reduce its dependence on natural gas imports, Zepeda told S&P Global Platts in an interview Wednesday.

"I wasn't pressured nor forced to resign," Zepeda said.

Zepeda announced early Wednesday he was resigning in December, several months ahead of the formal end of his term in May.

Zepeda said he did not resign at the request of the future energy secretary Rocio Nahle, as was rumored by Mexican media Wednesday.

The industry has been concerned about the future of Mexico's independent energy regulators after president-elect Andres Manuel Lopez Obrador's MORENA party in late October proposed as part of a bill placing CNH under the direction of the Energy Secretariat (SENER).

However, the bill was approved by Mexico's lower house early Wednesday without this clause. A legal advisor with the MORENA party told Platts the clause was removed amid industry concern.

"I have had a positive relationship with Nahle based on respect," Zepeda said Wednesday. "Resigning was an agreement I reached with her. It is a natural thing for me to end my term along with the outgoing administration."

Zepeda was one of the architects of Mexico's energy liberalization, tasked with opening Mexico's upstream sector, something Lopez Obrador has criticized.

Under Zepeda's leadership, CNH organized nine auction rounds, awarding 110 contracts that could potentially bring over $180 billion in upstream investment into the country.

The incoming administration has been clear the upstream contracts signed will be respected, Zepeda said.

"The incoming government is going to work under the existing energy framework. They have a large interest on the success of existing contracts while strengthening Pemex," he added.

Zepeda led CNH for almost a decade since its inception at the end of November 2008.

"The goal of my second term was to ensure that CNH would be the tool for developing new oil industry," Zepeda said. "Something we have achieved."

Currently 74 oil companies are operating in the country, of which 36 are Mexican, he added.

ADVISING THE NEW ADMINISTRATION

Zepeda will be an external advisor to Nahle and the incoming administration after he leaves CNH, he said.

Zepeda is hoping to help the new administration increase Mexico's and state-owned Pemex's natural gas output and decrease their reliance on imports.

"This is the area where I consider we have the most energy vulnerability," he said. "Diversifying our gas sourcing should be our number one priority."

Pemex's gas production has declined from more than 6 Bcf/day at the beginning of the decade to an average 3.9 Bcf/d in 2018, according to SENER. Mexico imports roughly 80% of its gas consumption from the US, according to the CNH. Still, a lack of infrastructure is preventing gas from reaching the southern part of the country, where supply shortages have threatened to halt some industrial activity.

Nahle has been clear the incoming administration will not hold new upstream auction rounds until the existing contracts prove to be successful.

However, the new administration has not disclosed how it will assess the success of contracts awarded.

"It is crucial to define what these parameters of success are. I hope this is another area where I can contribute," Zepeda said.

Right now, as the majority of contracts are at an exploratory phase it is difficult to judge them based on a production optic, he added.

CNH is working with Nahle and Pemex's transition team, led by future CEO Victor Oropeza, in finding ways to strengthen the state company.

The incoming administration has identified a series of small and medium fields that it hopes will increase Mexico's oil production in a short-term, Zepeda said.

CNH is looking for a way to expedite the regulatory approval and development of new fields without putting at risk their integrity.

"This won't only benefit Pemex but the industry at large," Zepeda said.

-- Daniel Rodriguez, daniel.rodriguez@spglobal.com

-- Edited by Jeff Mower, newsdesk@spglobal.com