Mexico’s Gas Strategy Lacks Storage Planning

Mexico has launched a new natural gas strategy to take advantage of global trends of a growing natural gas demand and increasing prices. The country seeks to consolidate its position as a liquefied natural gas (LNG) export hub using US-imported gas. Nonetheless, Mexico still has several weaknesses in its gas infrastructure that can hinder its goal.

Mexico has become particularly reliant on the US to fulfill its national natural gas needs, importing around 70 percent of its total demand. The gas flow is possible thanks to the pipeline infrastructure built between 2012 and 2018, adding up to a nearly 14bcf/d capacity, of which only half is used.

To capitalize on this unused pipeline capacity as well as the rising gas prices and increasing demand, Mexico seeks to develop LNG stations along its coasts to target the Asian and European markets. The strategy sounds attractive in theory. However, the country faces variousblind spots in its natural gas infrastructure that could endanger its energy security.

Even though it counts with enough pipelines to transport the fuel, Mexico lacks infrastructure for storage. The country has strongly relied on linepack instead of developing backup infrastructure, which would help the country mount a response in case gas flow between Mexico and the US is interrupted.

The relevance of the issue was seen during the winter storm in Texas in February 2021 when imports were interrupted, jeopardizing Mexico’s power production for a few days. The electricity service struggled with blackouts in the northern part of Mexico during a time when access to reliable energy was fundamental. Gas prices peaked, drastically increasing power production costs.

Debates regarding Mexico’s potential as an LNG hub while retaining its strong dependency on US fuel imports are gaining relevance. Topics like these and more surrounding the current state of the Mexican energy sector and the trends that lie ahead will be discussed by decision-makers and key players at Mexico Natural Gas Forum 2022. The forum will be followed by Mexico Energy Forum 2022 ECHO. Both events represent a unique opportunity to debate relevant issues surrounding Mexico’s main fuel for power production and the opportunities the industry has to take advantage of energy matrix diversification.

During Mexico Energy Forum 2022 ECHO, key stakeholders will share their insight regarding these issues, making the forum an event you will not want to miss.

Mexico Business is proud to extend an invitation to the first edition of the Mexico Natural Gas Forum, on Sept. 6, 2022, and the eleventh edition of the Mexico Energy Forum 2022, on Sept. 7 and 8, 2022. Throughout the three-day event, the industry’s most important leaders, investors and decision-makers will gather to discuss the sector's future and develop new business opportunities.