Natural Gas, LP Gas Consumption Falls

Demand for residential gas, both liquefied (LP) and dry natural gas, has declined in recent years. According to Adrián Calcáneo, Director Executive for Latin America in oil and LP gas, S&P Global Commodity Insight, due to the COVID-19 pandemic, LP gas production in refineries declined during 2020 and 2021, which led to a more limited supply that in turn pushed prices up. “Countries such as Mexico, Brazil, Chile, Colombia and Peru experienced a surge in price increases during this period,” he said during an interview with Energía a Debate.

LP gas has shown a downward trend over the past twenty years. This was mainly evident in the north and center areas of the country. Between 2021 and 2022, Mexico reported a 25.7% drop in LP gas consumption, going from 164Mb/d, to 121Mb/d.  

On the other hand, the upward trend in natural gas demand in the residential sector was abruptly interrupted when in the span of one year between 2019 and 2020, it fell from 99.1MMcf/d to 61.8MMcf/d, which represented a reduction of 35%. According to the Ministry of Energy, by 2022, Mexican household consumption had fallen to 54.4MMcf/day or 45% in comparison to 2019.

Calcáneo pointed out that the pandemic caused a slight increase in domestic LP gas consumption in Latin America. “LP gas was the only hydrocarbon with growing consumption during the COVID-19 pandemic, as people returned to their homes and cooked more,” he said. Mexico and Brazil top the list on LP gas consumption in Latin America. 

In 2018, the National Survey on Energy Consumption in Private Homes (ENCEVI) led by INEGI, reported that 80% of Mexican households used LP gas as fuel for cooking, against 7.3% for natural gas and 11.3% for firewood and charcoal. In this regard, Calcáneo said he does not believe that natural gas will replace LP gas in the residential segment because it had already found its niche in electricity generation and in the industrial sector. He added that this was highly unlikely also because governments are pushing policies toward decarbonization and the use of cleaner energy sources. “Being natural gas a hydrocarbon, it will be very difficult for governments to incentivize its development much more," he stated.