Mexico To Achieve Energy Security Through New Energy Strategy
Home > Energy > Article

Mexico To Achieve Energy Security Through New Energy Strategy

Photo by:   MBN
Share it!
María José Goytia By María José Goytia | Journalist and Industry Analyst - Wed, 09/07/2022 - 14:10

Mexico has drastically changed its energy policy over the past few years. Questions have arisen among varying stakeholders, as the state has increased its participation in the energy sector and drawn a line away from the previous administration's policy perspective. This current approach seeks to create national energy security and sovereignty, promoting social interest over profits.

Since 2018, the government has placed energy security as a pillar of its policies. Access to energy is fundamental to ensure the fulfillment of multiple human rights. Therefore, building the supply of reliable and accessible energy spills over into development plans.

"Mexico reformed its regulatory framework for energy in 2014. However, this reform has not yielded the expected results, as it has not been able to lower energy costs nor foster a more equitable infrastructure distribution," said Rocío Abreu, President of the Energy Commission of Mexico’s Senate.

To push toward these unachieved goals, the government carried out strategic changes in regulation and public policy. International developments during the past two years led the government to rethink the role of the state in the energy industry. "Within the Mexican government, various actions have been undertaken to achieve the objective of social development through energy policy," Abreu said.

These different government strategies tackle the different aspects of the energy industry. Regarding hydrocarbons, licensing rounds were held at the beginning of President López Obrador's administration, seeking to exploit mature fields near Cantarell.

To increase the production of oil and refined products in the medium term, the Olmeca Refinery, located in Dos Bocas, Tabasco, was constructed. This new refinery is expected to reach a production capacity of 172MMb/d of gasoline, 125MMd/b of diesel, 9.4MMb/d of propylene and 9.3MMd/b of natural gas liquids.

To change a long-standing trend where Mexico purchases the lion’s share of its refined petroleum products in the US, the Deer Park refinery in Texas was purchased. During 1H2022, this refinery processed 281MMb/d of crude oil and refined 293MMb/d of petroleum products. "By producing these products domestically, Mexico’s finances benefit, as the capital loss from the purchase of refined products is reduced," Abreu stated.

In addition, the government undertook, in collaboration with the private sector, the construction of two combined cycle power plants in Yucatan to provide the peninsula with reliable energy. The Valladolid plant will have an installed capacity of 1,0037MW, while the Merida plant will have an installed capacity of 509MW.

Concerning the strengthening of the national energy infrastructure, the government is promoting the development of new natural gas pipelines to expand its reach throughout Mexico. The Cuxtal I pipeline will interconnect the Mayakan pipeline with the national gas system, SISTRANGAS, and thereby ensure the supply of natural gas in the Yucatan Peninsula. On the other hand, the 715km of the Southeast Gateway pipeline will meet the growing energy demand in the southeast region of the country. This expansion project is carried out through an alliance between CFE and TC Energy.

"The national energy strategy also contemplates the advancement of clean energies," Abreu commented. Among the clean energy projects is the construction of the Puerto Peñasco photovoltaic solar plant in Sonora. This will be the first massive-scale solar park in Mexico, with an installed capacity of 1GW. In addition, an ambitious modernization plan has been undertaken to upgrade 14 of CFE’s 60 hydroelectric power plants. Mexico is also developing its first green hydrogen pilot project that will be developed in three stages between 2022 and 2024.

In conjunction with investment in energy projects, the new energy policy also altered the regulatory framework. "Our regulatory initiatives seek to maintain equality in Mexico, because if energy costs continue to rise, the Mexican population will be severely affected," explained Abreu. Among the main modifications are the Electricity Reform initiative in Congress and the reform of the Hydrocarbons Law.

The ultimate goal is to achieve Mexico's energy security through this new strategy. Energy goes beyond a profitable industry, argues the government; it is a fundamental human right that enables social development. This is the main reason why the state must place all its efforts in favor of national energy security.

The actions taken so far are not enough, however. Mexico needs greater investment in infrastructure and in the development of generation and transmission projects that guarantee reliable and accessible energy for all Mexicans. "Achieving energy security to boost the country's economic and social development represents challenges and opportunities that we will not be able to solve if we do not face them together, with public and private sectors," stressed Abreu.

Photo by:   MBN

You May Like

Most popular

Newsletter