The agreement with victims' relatives is likely to reinforce President Andres Manuel Lopez Obrador's reputation as a fan of fossil fuels, at a time when much of the world is turning away from them.

The hours-long gunbattles between a cartel force estimated to number 70 to 150 men and state police, leaving 23 people dead.

Mexico's murder rate increased by 2 per cent in the first 10 months of the presidency of Andres Manuel Lopez Obrador.