Mexico's Energy Policy: From Dependency to Self-Sufficiency
The political energy target of Mexico’s administration is clear: reaching energy self-sufficiency. To achieve this, the government has deployed a series of policies and strategies aimed at reverting the 2014 Energy Reform, which privatized the previously state-owned market. However, shifting back to state control has proven to be a great challenge. What is more, experts have identified the country’s overreliance on imported natural gas as a key weak point, as Mexico’s dependence on US gas increased greatly.
The Mexican government has tried to reverse this dependency on private power initiatives through the strengthening of PEMEX and CFE. The country’s electricity demand also increased, in 2022 as well, when Mexico consumed 333.5GWh of electricity. This represented an increase of 10.8% compared to the consumption of 301GWh in 2021, one of the highest year-over-year increases seen in the country.
As reported by CNH, national natural gas production grew by 6% in 2022. The Quesqui and Ixachi fields spearheaded this growth. Although this uptake slightly decreased Mexico’s US gas imports, the country is expected to have a higher demand for the next couple of years. Moreover, as CFE plans to increase its natural gas-fired power generation capacity, its demand for fossil fuel will grow.
Experts highlighted that Mexico’s lack of storage is, in fact, a matter of national security, too. Insufficient storage poses a threat to the country in case of supply interruptions or extraordinary events that could affect the pipeline flow. However, despite the urgency for energy self-sufficiency, the government has prioritized other landmark projects over storage, which is a long-standing problem. Nevertheless, the recent demonstration of interest by the current administration in enhancing this infrastructure has given some in the industry more reason to be optimistic about future growth.
Experts concur that natural gas remains essential to offer energy security as well as to ensure the energy transition. “I believe the answer is yes [as to whether the energy transition is even possible], but only if we stop ignoring that hydrocarbons, particularly natural gas, play a fundamental role in making this future even remotely possible. Today, the energy density, portability and availability of oil and gas cannot be matched. Even if the world had the money to develop all the clean energy we need over the next 20 years, which as Daniel Yergin pointed out, is not the amount we need today but likely two times that amount, the costs required will further drive a divide between rich and poor,” said Warren Levy, CEO, Jaguar Exploration and Production.