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News Article

How Will Mexico Achieve Energy Self-Sufficiency?

By Cas Biekmann | Wed, 03/11/2020 - 11:51

The National Development Plan 2019-20124 was at the heart of the first presentation of Mexico Energy Forum 2020. Manuel Rodríguez, President of the Energy Commission of the Chamber of Deputies, highlighted the government’s plans regarding energy sovereignty, mapping out the country’s strategy moving forward, including gas, oil and renewables.

 

Mexico has prepared an ambitious plan to achieve energy sovereignty, sustainability and self-sufficiency. And while the drastic drop in oil prices this week is top of mind, it will not change Mexico’s strategy, Manuel Rodríguez, President of the Energy Commission of the Chamber of Deputies, told the Mexico Energy Forum 2020 audience on Wednesday at Mexico City’s Sheraton Maria Isabel hotel. “It is not the first time we have seen oil prices plummet and it will not be the last time either. We are certain that the market will recover as we have seen it recover in the past,” he said.

To achieve self-sufficiency, Mexico will focus on oil and gas as well as renewables. Regarding oil, the first order of business, Rodríguez said, was to reverse PEMEX’s 50 percent oil production decline since 2004. Storage is another important element in the strategy. "Storage continues to be the great challenge of renewable energy development," he said. At the moment, Mexico has an oil storage capacity of three days, and just two days for gas. Focusing on refined products, Rodríguez said the country imports around 70 percent of its products and 90 percent of gas. The goal is to reverse these trends by refinancing PEMEX’s debt. “The NOC has tools to reverse its fortune,” he said. “By aiming to foster the contracting of local companies for operations, communities nearby are poised to benefit as well. Storage capacity is aimed to increase to 14 days by 2021.” Furthermore, with the Dos Bocas refinery about to be built and the six current refineries improved, importing refined product will be less of a necessity as Mexico will be able to provide 70 percent of the fuels in consumes by itself, he added.

Gas is another benchmark for Rodríguez. “Currently, only 20 states in Mexico are gasified, and without natural gas, it is very difficult to develop the industry. The goal is to do it by the end of AMLO’s administration and recover the lag in certain areas of Mexico,” he said. A zero-emission fuel, natural gas is widely present in the north and center of the country.

Renewables are another important pillar in Mexico’s energy portfolio. Rodríguez said that 22.5 percent of the country’s energy comes from renewable sources. "The current goal for 2024 is that 35 percent of Mexico's energy mix is composed of renewable sources. We hope to even surpass that goal,” he said.

Rodríguez also discussed the Energy Commission’s approval of a reform to article 29 of the Energy Transition Law to include the promotion of electric power generation programs on federal government real estate. Another initiative from the commission is related to stability. Energy projects are planned ahead for the maximum of a presidential term. By planning ahead for 15 to 30 years, investors would have the certainty to invest billions of dollars, according to the commission. The commission as drafted an initiative to create the Center for Energy Analysis and Development Studies (CEADE) to provide technical support for its legislative work.

Addressing concerns from an audience member that with the renewed focus on oil, renewables and other sources of energy would suffer, Rodríguez sought to dispel anxieties. President López Obrador is committed to supporting the Energy Reform and is open to the industry’s concerns, incorporating their remarks in new policy, Rodríguez said.

Cas Biekmann Cas Biekmann Journalist and Industry Analyst