Mexico’s Gas Demand Drops Despite Record US Import Surge

While LNG export capacity continues to grow, Mexico’s domestic natural gas consumption fell by roughly 4% in 1H25 compared to the same period last year, equivalent to nearly 2 bcm. The primary driver behind this decline was a reduction in gas-fired power generation, even as gas remains deeply embedded in Mexico’s electricity mix. Against this backdrop, the country posted record imports from the United States and continued expanding its LNG export footprint.

Natural gas has powered more than half of Mexico’s electricity since 2009. By 2024, it accounted for 58% of total generation, up from under 20% in 2000. According to the Ministry of Energy, the country now imports over half of its natural gas from the United States, with American imports covering nearly 75% of total demand, or about 8.7Bcf/d.

Imports reached a historic peak in May 2025, with Mexico purchasing 225.3Bcf of natural gas, the highest monthly volume on record and a 6.2% increase over May 2024. In total, Mexico imported 979Bcf from the US between January and May, up 4% year-on-year. At an average price of US$2.56/Mcf in May, Mexico spent an estimated US$576.7 million on gas that month alone.

Despite this growing dependence, domestic output has failed to keep pace. The country’s upstream activity remains constrained, and pipeline imports are increasingly relied upon to meet both national consumption and the needs of emerging LNG export terminals.

North America’s LNG Footprint Grows, Mexico Plays a Key Role

North America remains the central engine of global LNG growth. Combined LNG exports from Canada, Mexico, and the United States are on track to grow 27% this year, adding 32 billion cubic meters (bcm) to global supply, more than the region contributed over the previous three years combined.

Mexico’s contribution to this trend began in 3Q24 with the launch of Fast LNG Altamira Train 1, which has continued to deliver steady export volumes into 2025. Looking ahead, the country is poised to boost its export capacity further with the anticipated 2026 start-up of Sempra’s Energia Costa Azul (ECA) LNG Phase 1, with a nameplate capacity of around 4 bcm/year. Meanwhile, the US and Canada are both expanding aggressively: the US will add 18 bcm to its LNG output in 2026, primarily through Golden Pass LNG, while Canada’s LNG Canada project, having exported its first cargo on June 30, will continue ramping up.

Together, these three countries are expected to account for more than 70% of all new LNG capacity worldwide by 2026.

New Administration Doubles Down on Combined Cycle Power, Natural Gas 

Rather than diversifying away from natural gas, the incoming administration of President Claudia Sheinbaum appears to be leaning on it further. In early July, Sheinbaum inaugurated a new 437.2MW combined cycle plant in Villa de Reyes, San Luis Potosi, where she announced plans to build 60 new combined cycle facilities during her six-year term. The initiative aims to add 26,000MW of gas-fired generation capacity through state utility CFE.

As of 2022, nearly 60% of Mexico’s electricity came from combined cycle plants, with 34.4GW of installed capacity generating around 187.6GWh, representing about 40% of total stored capacity. The expansion plan could deepen this dependency at a time when fuel supply risks and global market volatility continue to loom large.

For years, Mexico’s LNG infrastructure focused primarily on three regasification terminals, Altamira, Manzanillo, and Energía Costa Azul, used to convert imported LNG into gas for industrial and power grid distribution. However, since 2022, development has shifted rapidly toward liquefaction terminals aimed at exports. Major projects include Mexico Pacific’s Saguaro Energia in Sonora, a US$15 billion investment targeting 15Mt/y of exports to Asia using US gas; Sempra Infrastructure’s Costa Azul LNG expansion in Baja California; Vista Pacífico LNG in Sinaloa, connected to Texas pipelines; and Amigo LNG, designed to shorten shipping routes to key Asian markets.

Global LNG Expansion Continues Amid Uneven Demand Recovery

Global natural gas demand resumed its upward trajectory in 2024 and continued to grow into the first half of 2025, although momentum has noticeably slowed. Much of the growth was concentrated in Europe and North America, where unusually adverse weather conditions spurred increased gas consumption in both buildings and the power sector. Asia, in contrast, saw a downturn, with gas demand in China and India declining over the same period.

Tight market fundamentals persisted into mid-2025 due to reduced Russian pipeline exports to the EU, tepid growth in global LNG output, and heightened storage injection needs across Europe. These conditions have supported elevated prices in major importing markets, dampening demand in more price-sensitive regions like Asia. Geopolitical tensions, including the flare-up between Israel and Iran, have added to volatility, underscoring the fragility of global gas supply dynamics.

Despite a projected deceleration in 2025, the International Energy Agency (IEA) forecasts a rebound in global gas demand by 2026. An expected surge in LNG supply is set to alleviate pressure on the market and reawaken demand in Asia, potentially sending global consumption to a new all-time high.