Episode 18 – Opening Mexico’s oil and gas industry with guest Aldo Flores-Quiroga

[0:00:00 Speaker 1] This’ll is Policy on Purpose, a podcast produced by the LBJ School of Public Affairs at the University of Texas at Austin Way Take you behind the scenes of policy with the people who help shape it For more. Visit LBJ dot utexas Study Teoh. Hello,

[0:00:20 Speaker 0] everyone. This is essential Evans, the dean of the LBJ School. And I am so pleased to introduce to you Aldo Flores. Kyoga.

[0:00:29 Speaker 2] That’s very well said. Thank

[0:00:31 Speaker 0] you. Very good. Uh, I had I studied Spanish and I was exchanged in Ecuador when I was, like, 16 and I think part of the just help me. But I wish I spoke. I wish I speak better, but I don’t. So But I have you here and I am so happy to have you here. Uh, and for those of you who don’t know and can I call you Aldo? Please do. Okay, if you don’t know Aldo. Aldo was very key in the Mexican government. The last administration. He was the former deputy secretary of Energy for hydrocarbons. Ah, at Mexico’s Ministry of Energy. But before that, he was involved in a lot of issues and strategies for Mexico not only within the country but also around the world, represented Mexico in a lot of these international arena’s and actually served the secretary general of the international energy form. And it was for five years. So that was five years. That’s such a such a different culture, like going from Mexico to Saudi Arabia. But what it gave you, I think, and this is what we want to talk about is a perspective of not only, you know, from your academic grounding in your work in Mexico but the world, you know, looking at a collaborative environment where we’re dealing with some very important issues that face humanity, which is our energy and our use of hydrocarbons and just how we make the planet safe and yet productive for people. So one of the things I wanted to talk to you about and he have are people who are listening us hear from you. You’ve been in this even though you are young. You’ve been in this quite a while and you’ve seen a lot of different dimensions in this, from the academic dimension to a very you know, state level in different agencies in a country as well as international. What do you see as some of the barriers in collaboration when we try to collaborate with folks who have different approaches. What what sort of your secret sauce and trying to work with these people?

[0:02:29 Speaker 2] Wow, what a question. I secret cells. Let me I want to try to find it. But let me first say that I’m so happy to hear I’m a big admirer of LBJ on duh such a famous school. And so it’s great to be around and having a conversation with you and learning about all these activities at the school is doing, um, well, yes, my experience has been very much about building bridges between disciplines and between countries and even between sides in terms of the old market producers and consumers. And, um, I don’t know if I have a secret sauce, but clearly one has to understand the other side very well. One has to understand where they’re coming from, what their interests are on da work from there to find their connections. Obviously, one has told us, understand on one side, and when one is looking for. But, um, the step of interactions require, um, win win mindset. There’s always a space for finding agreements and building up a collaboration. This is, by the way, when academic efforts become very interesting when they become trans disciplinary. I’ve been doing economics and politics for a long time. I did so in academia and even the space off policy and international offers. You do have to have an interdisciplinary mindset, and you have to look at a broader picture to understand what is a space for negotiation and reaching agreements and pushing an agenda that is productive for work.

[0:04:05 Speaker 0] Well, there’s There’s a lot of complexity in the any answer. So one of you know what is, you know, your but no, there’s a it’s complex. And this is what we’re trying to get it when we’re looking at public policy schools and helping our students understand the complexity, but also given the skill sets that they can actually go into the envy successful. So one dimension of what you’re talking about is just a small, tight disciplinary dimension. So you understand the law. You understand economics. You understand the expertise that it takes to be in the energy sector, because all of those have different ways of approaching a problem. So that’s very important to do. And so that’s one dimension, which is difficult in the second dimension. That is to thinking about your national. You know what’s good for the nation, whatever nation urine, but still having to work in a global community where there’s other nation states, other seventies that have their own approach to things and how you blend that together. I think I think that’s very hard, and that’s what we’re trying to think about. How do you teach students to do that? You know, on, um, and you seem to have just moved into it been very successful. But what can you point to something in your background, your educational background, your experience? Bear crime? You said, I can see I can now see this picture, and that’s how I need to behave in this world.

[0:05:22 Speaker 2] Were Summarecon with your words, but and let’s see, I one key experience or insight that I had upon moving between countries is that we tend, or at least I did to have our reference cultural references or points of reference as given as if they were the only way of looking at the planet or even an issue, and that might apply within a country. Now that I’m visiting Texas, I see that Texas have ah different perspective of the world in California, and so are

[0:06:01 Speaker 0] things from Texas. Don’t have the same perspective. And

[0:06:06 Speaker 2] so so it’s not also different from that trying to understand on that other what these other culture values on way that is important. And, um, that is a different mindset. It allows for a different conversation and even understanding life and policy from a different angle in a way that I believe is very can be very useful now. The other thing that is this is a little bit different, but it’s wonderful for public policy, students to understand is that there’s a moment in the decision making harking that solutions are not straightforward. That is not just about okay. I don’t know optimized, uh, this equation or I found this Solutionary. At some point. The solutions involve very hard trade offs and your most of the time choosing between two bats between outcomes that are not going to be comfortable regardless of what you choose. And we do tend sometimes to think in academia, and that there’s these very gonna know Yellow Path to paradise is very nice, Ah, solution that can solve many other things. And it’s not like that. It’s Ah, you saw one thing, but at the expense of nuts holding another. And that’s a constant.

[0:07:33 Speaker 0] Yeah, that’s again. That’s really very wise, because one of the things we talk about is first of all, what is the problem? Making sure that everybody can at least agree. And what the problem is in that in and of itself is a major issue in many realms. But then it is okay. If you have this problem and it’s come to you, what do you do about it? And there’s not the way there’s many ways. And so the idea is a critical thinking is if I go this way, these tend to be the consequences, and you try to foresee that. Is it feasible economically or socially or, you know globally, and if it when will we know if it doesn’t work? So those types of things, I think we can talk about them, but I think one of the things you said is if you don’t really he had the experience of being in a different setting with different people. You just can’t quite understand how toe work that you know. And

[0:08:26 Speaker 2] you said it better than I thought I did.

[0:08:28 Speaker 0] No, I don’t think so. But it’s

[0:08:30 Speaker 2] but yeah, that’s that’s definitely one part of it.

[0:08:34 Speaker 0] So what did you find the most difficult adjustment for you when you went into, Let’s say, when you any time you moved into an international setting, what for you personally was very outside of the, you know, the disruption of your your home, etcetera. When you went into these different international types of associations, what did you find? The most difficult thing that you had to work on, uh, to feel like you were successful,

[0:08:58 Speaker 2] letting me answer that on two levels. One is just, let’s say, cultural, personal what I think is worth well, saying it a t least for me, I, um, tended to make things more exotic than they were, right, X. So I thought that some things were all this is so different. And then you discover just saying a different expression of the same human experience and principle in the earning and want on whatever. So if you move abroad and do that type of work, don’t make things more exciting, exciting?

[0:09:35 Speaker 0] Well, you got a different setting. I mean, that’s terrible. It’s true. This, like I’m going to Arabia. I’m going to, you know, Morocco where?

[0:09:42 Speaker 2] But for example, we from the Western Hemisphere tend to think of the Middle East us extremely different. And yes, they’re very. There are marked differences, but people are people everywhere, and families want to grow Children’s happy, happy Children and etcetera. So they care about the same things. They do them differently. Off course. We have different perspectives on how to address them and the rest. But anyway, it’s worthwhile keeping that that mindset snow. And I guess that a place as well and in settings like I Waas facilitator, that’s part of my job. When I was working in Saudi Arabia between producers and consumers, this organization was made to promote dialogue mainly between OPEC and I A members. It was born when the Gulf War of the 19 nineties to place, and it was a major price increases in the market and therefore people were worried about energy security and the stability of ill market and what might happen to supply an investment in the wrist and so this WAAS eventually, uh, formalized into a process that is this organization. And it’s now not very useful to think about producers and consumers and different sites of the table. Take the U. S. The U. S. Is both a huge forget consumer, but not a huge producer also off of oil and gas. And, uh, so the roles are shifting, and in a way, they were never opposite their complementary. And one has to understand that to think more creatively about solutions,

[0:11:29 Speaker 0] you know, although you’re saying so that we had a podcast previous with Susan Gordon, who is, you know, the principal deputy for director for initial Intel’s up National Intelligence. And she said, a very similar thing. When you’re talking about it used to be the privates and then the public’s that used to be, you know, the federal government and then the business owners, and that’s blending and the are are big challenge. I think for those of us who are trying to grow, the next generation that’s gonna move in that arena is how do you prepare students for the kind of blend when all the historical underpinnings have been like there’s two sides and There’s two factions or there’s, you know, and they’re discreet when they’re really not

[0:12:12 Speaker 2] correct. Uneven. In this world of social media, Twitter tends to polarise recently, and it is just worthwhile to step back and remember that we’re on the same boat. It’s no different sites known, at least in those very basic terms, and that there must be a way and to find productive living together to make out a better planet, even though it sounds that remind

[0:12:43 Speaker 0] No, no, no, it is. But I think that’s again what we’ve heard from a lot of people who were brought on here, who are example, are people have stayed in and services that you know, this idea, that there is this greater good, uh, and that their eyes on the ball and they have different ways of approaching it. But it doesn’t sound corny. I mean, that’s exactly what we’re hearing consistently about. People have come to us on visited without sound, this podcast,

[0:13:07 Speaker 2] and you have to believe it. Ah, my take is that we do that we do this type of things because we believe in that. We believe that we can make a difference, that it Will will really make things better. Otherwise, it’s just, uh, during one more job.

[0:13:23 Speaker 0] But I want to talk to a little bit about something we’re trying to work with. So many of your jobs required coalition building. You had to have coalitions. You hate of college aged cooperatives. So in a coalition you have multiple players. How did you work it when you had maybe one out of the coalition that really did not want work with you? How did you get people who normally would not work together on me put it that way? How do you get people who normally don’t want to work together to work together and stay together than after that? So it’s not like, Ah, jumpstart every time you have a different issue. Do you have any ways that you felt were successful in terms of trying to get there? Because I think that’s one thing we have to teach our students how to do

[0:14:07 Speaker 2] well. The first thing is, don’t add to the noise. Don’t become a part of the off the polarization, especially if you want to be led. Coalition. So acknowledge what the different parties are interested in addressing and solving and be conducive to a process off off exchange that leads there on gun. That doesn’t mean that there is a guaranteed ah solution or agreement or an outcome, but he does sustain a process that eventually might lean to finding that gate to the right approach in which everyone can participate. That’s one thing. The other thing is that having a mandate in itself means that one can already build a coalition. It means that people agreed that even though they disagree there, someone there that will try to find solutions will keep it.

[0:15:08 Speaker 0] So that’s how

[0:15:08 Speaker 2] far do

[0:15:09 Speaker 0] they have such heaven and gold that everyone’s agreed to? Yeah,

[0:15:12 Speaker 2] yeah, yeah, Least, or at least an agreement about the principles that matter, Right? Yeah. If you think of the letter of the success off off the US democracy, there’s an agreement on what the principles are. There might be a lot of ships in who’s in government or not, or policy and the rest. But the basic rules of the game are accepted. That helps a lot.

[0:15:34 Speaker 0] What about persistence?

[0:15:37 Speaker 2] You have to have bad news for you

[0:15:41 Speaker 0] have you have to be willing to, you know, okay, that didn’t work. I have to come back and that didn’t work. And I have to come back and having that kind of drive the patients, ah, to persist because I think many people like to see things immediate like, and they expect, like, immediate resolution or an immediate feedback. That this is working isn’t were. Sometimes it just takes quite a while for people that just, like internalize it. And then eventually it comes out. Yeah,

[0:16:11 Speaker 2] and it also takes a while for those that are participating to also understand what they want. Sometimes you enter into a conversation in which the other party believes that this is the key value to trade, Let’s say or not, and suddenly it’s something else. So a process allows also to discover what is it that really matters in that in that conversation

[0:16:40 Speaker 0] And the other thing, too. I’m sure that once you’re all like when you’re together, it’s like a socialization to you get to really see people as people rather than representative. And having those human relationships always helps, especially if there’s a trust level. It has to be built,

[0:16:56 Speaker 2] correct. It helps a lot. So the process in the this organization was very much about that. We did have to organize many expert meetings to analyze subjects and then get to official Ministry of Meetings. And we had to facilitate about a lot of exchange and to produce also data on DA analysis that will help reframe some of the subjects. So, for example, I would respect to the old market. If you think the off at any moment that there’s a big movement in prices, people immediately ask why what happened? And that means trying to find where the supply demand balance. Yes, so you’re looking for data. And it’s very is that there’s a huge market years for just for finding that data, and it’s not that easy to find. And then so you say OK, that this may be because there’s an excess supply or excess demand. But then the next question is, why? Why are we suddenly finding ourselves in the situation? So that takes you to well, because we made X decision 10 years ago that affected the path of supply that takes you to the real mawf energy outlooks and what might be the future of the energy industry, because what you believe today about what’s gonna happen in 10 or 20 years will determine your investments today and eventually will affect what happened have been seeing in the US right now. So So, for example, those two things imply a lot of work from experts everywhere from, AH, government agencies around the planet just to collect information, to create the mandates, to have the infrastructure, the institutional capacity, that technology to aggregate this information so that a group of ministers can have it. And once they have it, then there’s the next challenge to see if everyone agrees on the interpretation of what that is and the rest. So, um, our old in terms of ah helping the process waas about this data generation process, a collaboration with many agencies, think not only the i n o pic, but U N statistics Eurostat, a pick and Latin American agencies etcetera etcetera and ah, and then the collaboration world. These governments and doing making his day look happen. And also it’s a big discussion. For example, on how prices are helpers has come about understand interaction between physical and financial markets that is now much more relevant to toe help. Prices come about. And so we also had to do a lot of work on those things. So all of these things, implicitly or explicitly, are about coalition building, about creating a knowledge space about creating a negotiating and dialogue space that builds up to some perspective on how the planet is working. Or at least the old market is working.

[0:20:06 Speaker 0] Yeah, well, one of the things you mentioned, ah, which is another thing that I think is very challenging. And again, we tried to think about how we can instill this. The skill sets and expertise in this is data. You know what evidence and who collects the evidence. What are the assumptions in the evidence or the gaps? Because oftentimes the evidence is not there. And the best policy is not to make a decision when they’re still this harm. Do no harm. Exactly. So when you were doing all this and you were in this very high level policymakers thinking about this, how did you all decide what information and and data you could trust? How did you build that? Was it really the academic community that you went to? Because they’re supposed to be objective? Was it the industry because they had more technical expertise and knew how to collect it or if it was all of the above. How did you discern what you were really going to pay attention to, Um, and if you didn’t have the data, what you were going to do the next time to have it, because that’s a very big challenge. I think I’d like to hear how you been over there

[0:21:11 Speaker 2] with With Did resort to all sources. Um, I, without a doubt academic sources where very useful because they are analytical, they overall tend to be reviewed and refried. And then that means that there’s that you can. There’s trust in the information that you’re that you’re receiving or analyzing, but but it’s not enough what we buy. Data, I will also say, include insights and perspectives from stakeholders from industry, from society, from anyone involved, because it also helped not only in, um, maybe refining or fine tuning the the quality of information, but in interpreting better what that data point meant. For example, so it was very useful always to have as many perspectives as possible. Ah, with respect to a particular issue, because again, well, we are making policy. We were making policy sometimes, um, at a very fast pace, and we had to correct constantly our perspective so or at least check them rather from as well as many views as possible. So, um, but there’s no way around it. Data is non negotiable. Trust the evidence supposed to authority here tonight. Use that yes, first and then complement with rest, but that the hard part is that you do have to be making decisions with very in perfect information. There’s a moment in which I won’t call it a hunch, but but you have to make a decision with information that is not a deal, and you don’t have the luxury of waiting three months to see if somebody since you information or something. There’s one more run on the econometric analysis and you can do something. You just have to make the decision

[0:23:25 Speaker 0] that I think is critical because that’s the world. I mean, that’s not just in the environment you’re in, especially if you’re doing things that are created for cutting as your transformative. You know there’s not gonna be that data so you can put together the data that you already have, and it doesn’t really totally align or there’s a big gap in there. And then you have to think about hideaway, develop a policy or an approach that is flexible, that if I do get some more data number, I’m gonna do know her. But then how how do I keep an eye and what’s really going on? So that if I see some changes we can have, that policy can be flexible.

[0:23:57 Speaker 2] And that’s where schools like this one make a difference, because that’s where the framework in the in the absence of sufficient information used to have a framework on. With that, you used to think about a problem or a challenge, and usually that framework has the benefit of accumulated evidence in principle. If there’s a lot of case studies on the rest from past experiences,

[0:24:22 Speaker 0] the expertise is built, the capacity

[0:24:25 Speaker 2] so you need that on. That’s probably it will, in my view, at least, the only sound way out, because otherwise it’s just all hunches or our intuition or whatever.

[0:24:38 Speaker 0] In a total

[0:24:39 Speaker 2] exactly so all these theory and methods that are being taught at schools like this one is very important to think um, systematically about an issue, Onda about possible solutions, even if or if you don’t have the old information that you need.

[0:25:00 Speaker 0] That’s why it’s really important that you’re here talking to the students, not just this podcast, but they’re gonna have a chance to talk to you. I’ll don’t want to switch to your last job strategies for Mexico on hydrocarbons. Um, how would you compare the had experience working within the country with all the stakeholders to the experiences you had in the international? Was it easier? Was it harder because, you know, you’re in a country that may have Ah, it wasn’t a solid voice. You know, like you’re representing Mexico in a larger community. When you really starting to get more into the nitty gritty of that. How how was it for you? Uh, deserves the first question. And then if you when you answer that when you grow something and you put so much of yourself into a strategy and then you leave, uh, how do you feel about the sustainability of that strategy in terms of how governments can sustain that?

[0:26:01 Speaker 2] Let’s see. Well, first of all, it’s always a privilege and honor to serving one’s country. I tried to make a difference that, uh is very meaningful. And, um, it’s a big responsibility on DA. A key difference between what I was doing basing in Saudi Arabia and in Mexico is that in Saudi I waas running this internationalization, not representing my country America, definitely Mexican. But I was the head of an on institution off 75 member countries and I waas accountable toe to all. But the one drawback of those positions is that you cannot make the final decision on a specific policy. Your you help a lot in in decision finding. Searching. Yes, but the final outcome is up to the country’s. The ministers in Mexico had the privilege of working on doing policy and steering policy in a the direction that we felt was very important. Onda um and it waas fascinating and challenging experience. We were test, um, to make to create this new reality in a short period of time because the country needed needs a stronger energy sector on much more investment and much, much, much more dynamism and, uh, and technology driven growth than we’ve been having for a while. And that meant constant effort and constant hard choices. And as I was also referring to decision making made without sufficient information. Ah, lot off interagency coordination on duh coalition building and negotiations. Even if you have five agencies that are test with the same objective and everyone shares the same objective, it doesn’t mean that everyone agrees on how to get there or even if everyone agrees to get there. They are subject to different bureaucratic rules, her standards whenever. Yeah, so it’s a very complex place is very soon. So, uh, getting the hands on doing policy was fantastic. And I must say, having come also from academia on being in this academic setting, it made a huge difference for me to have those tools, those skills when thinking about how to great markets when, where they weren’t so we had to transform a state monopoly into a set of markets. On my count, our energy industry, you could say that is composed of 52 broadly defined markets. At least 35 required work to make them look competitive, right, and each one of them has a specific correct Ristic that records a different application or something. And it was my training in academia that help me sort through many of these issues and challenges. And, uh, yes, it made. It makes a big difference to have to have that. But, uh, it’s more fun on a huge responsibility as well. And sometimes it’s very daunting to realize that you’re making decisions that are affecting so many. And, of course, when believes in them. And we were very committed group Well, with a very committed Department of Energy of Mexico, very committed secretary and President. To make this which

[0:29:55 Speaker 0] makes a difference, your leadership is behind you and supporting you.

[0:30:00 Speaker 2] Yes. Yeah. So how does it feel when one’s out?

[0:30:04 Speaker 0] Yes,

[0:30:05 Speaker 2] Well, you learn that. Do you have your moments? Us is right. And of course, one has strong feelings about what we did. What I did Onda team as well. Um, I don’t know. I guess when it’s hard sometimes to understand and some perspectives that come afterwards you feel misunderstood. You realize as well that maybe you could have communicated better some of the things you were doing, so they were better understood. We are very persuaded that the path we chose is the right one. Now there’s an administration that is reviewing that path. They are not as persuaded, but they they are very reasonably, I believe, also revealing what we did, because there’s no way we can presume that the that the truth and the only way out of doing things is the one that we chose. So these new administration has decided that the energy opening that we had in Mexico must be analyze and reviewed Onda and maybe or maybe not relaunched based on your premises. And I think that’s also very valid. Yes, so one has to also understand that on, um, I think it’s part of healthy Democratic processes.

[0:31:28 Speaker 0] I agree. I totally agree with that. Also, it’s, uh, the word I’m trying to find the word for. But I think one of the things that’s really important is that no matter what happens, the fact that people increased the knowledge, increased the expertise, thought about it in a different way. That’s always there. Whether people except there, it just adds to the knowledge base adds to the experience. People have an expertise say, bring So although before we end this, why did you choose to go into the public service and was kept you there, too. I get it

[0:32:07 Speaker 2] because it’s because it’s meaningful, because having a purpose makes a huge difference because doing something that is bigger than oneself because it is just very stimulating. Um, one has to try to beyond leaving a mark, just trying to improve things. Ah, and, uh, for this improve things for the country which will leave. So there’s community in which one lives as well. And I’ve always heard about that I did grow up in our family were politics and public coffers were very relevant. So obviously I was socialising to this type of subjects. Yes, Um, my dad was an academic himself on, and he was in politics, so this was kind of a daily motion at home. But I I do care about that. I am someone that has always thought all the subjects I started them. I was very much involved in my graduate studies, trying to understand how to make structural reform work, because that’s what my country needed and has been eating over the last 30 years, sexually. And, um, that was about just making things better. And that’s how I got involved in it. So, yes, it is very meaningful to me to go beyond a paycheck or just, uh, profit you want to. It’s just it’s nice to contribute.

[0:33:52 Speaker 0] This is Ah, this has been wonderful and being very open and sharing with us. Your experiences in your feelings has been We’re very privileged. So we’re very happy to have you here. We’re happy to welcome you not only on this podcast, but to the BLB LBJ School. So thank you so much.

[0:34:08 Speaker 2] Thank you so much. Very kind. Great

[0:34:10 Speaker 1] to hear. Thistles. Policy on Purpose, a podcast produced by the LBJ School of Public Affairs at the University of Texas at Austin. We take you behind the scenes of policy with the people who help shape it. To learn more, visit LBJ dot utexas dot edu and follow us on Twitter or Facebook at the LBJ School. Thank you for listening