Natural Gas Availability as an Investment Attractor

Natural gas has become the backbone of Mexico’s energy system, powering more than half of the country’s electricity generation and supporting its most strategic industries. However, Mexico’s growing dependence on US natural gas imports and its limited local production expose the country to serious risks. Beyond the threat to energy independence, this reliance could also undermine Mexico’s ability to attract long-term investment, leaving its industrial growth and economic stability vulnerable to external shocks.

Today, more than half of Mexico’s electricity is generated using natural gas imported from the United States, driven by rising energy demand and declining local production. According to the US Energy Information Administration (EIA), US gas imports to Mexico surged twenty-two fold between 2000 and 2024, climbing from 287.9MMcf/d to 6.4Bcf/d. Meanwhile, only about 15% of domestically produced gas is made available to consumers, with the majority consumed by PEMEX in its own processes.

During 1Q25, Mexico recorded its highest-ever natural gas import levels from the United States. According to EIA data, the US exported an average of 187Bcf of natural gas per month to Mexico during the first three months of the year, representing over a quarter of total US natural gas exports in that period. Imports reached an average of 6.25Bcf/d, a 4.6% increase compared to 1Q24, when imports averaged 5.98Bcf/d.

To address this heavy reliance on US exports, a joint December 2024 report by the Mexican Institute for Competitiveness (IMCO) and the Mexican Natural Gas Association (AMGN) stresses the urgency of developing Mexico’s natural gas value chain, from production to transportation, to secure the economic and social growth the country seeks. “The availability of natural gas in the region makes it an opportunity to attract and retain the investments the country needs to drive sustained economic growth,” the report noted.

Natural Gas and Energy Demand Growth

Carlos Aurelio, President of the Energy Commission at Coparmex, coincides with the IMCO-AMGN report, stressing that natural gas availability has been central to attracting foreign investment, particularly in sectors like automotive manufacturing. He explained that many of these investments come from the United States, Europe, and Asia, with companies producing goods in Mexico using US-imported natural gas. These goods are then largely exported back to the US market, creating a value chain where Mexican exports benefit from energy content under free trade agreements.

Expanding natural gas infrastructure would help meet rising electricity demand, which grew by 2.7%% in 2024, while also boosting the energy supply required to attract and retain both investment and talent. Since 2009, natural gas has played an increasingly dominant role in Mexico’s power generation, as according to Ember Energy it made up 58% of total electricity output in 2024, up from just under 20% in 2000. According to the report, this shift carries major implications for the power grid and the manufacturing sector, the two largest consumers of natural gas. 

Data from CONAHCYT shows that the industrial sector is Mexico’s largest energy consumer, with medium-sized businesses and industries accounting for 36.6% of demand, and large-scale industrial operations adding another 20%, for a combined 56.6% of national electricity use. Mexico’s energy demand rose by 2.7% in 2024 to approximately 365TWh and is expected to grow at an annual rate of 3% through 2027, reaching 480TWh by 2035. In parallel, the industrial sector consumed 15.5% of Mexico’s natural gas in 2024, or 1.361 Bcf/d, though demand remains 17.5% below pre-pandemic levels.

Production, Infrastructure Challenges to Beat

Aurelio emphasized that affordable natural gas has consistently tipped investment decisions in Mexico’s favor, further supported by the country’s skilled labor force. However, he believes Mexico now needs to rethink its energy strategy to maximize the competitive advantage offered by its own natural gas resources.

“Having access to the cheapest gas in the world is definitely a competitive advantage,” Aurelio said. “But as a country, it is a risk … that we continue depending on US gas when we have natural gas in our own territory. This is an advantage we need to fully capitalize on as a bridge to start producing as much as we can within Mexico.”

The south and southeast of the country show promising growth, but face limited development of natural gas infrastructure. Fernando Cruz, Energy Director, Kannbal Consulting, highlighted the growing urgency in the Yucatan Peninsula, where demand is outpacing capacity and is projected to double by 2030. Cruz warned that the combined-cycle plants currently under construction will not be enough to meet this growth, stressing the need for more investment in natural gas infrastructure.

“This is a major opportunity to attract investment, particularly in the infrastructure needed to deliver natural gas to regions that currently face supply and power generation challenges,” Cruz said.

Cruz noted that one of Mexico’s biggest weaknesses is that PEMEX produces limited quantities of natural gas, much of which is consumed internally. Cruz emphasized that beyond pipelines, Mexico must prioritize investments in natural gas storage. “Right now, we only have enough gas in storage to last two or three days if US supply were interrupted. We are completely exposed.”

Mexico’s vulnerability became evident in February 2021, when winter storms in Texas froze pipelines and temporarily halted natural gas flows to Mexico. The disruption forced CENACE to impose rolling blackouts across 26 states to prevent a system collapse. “This episode starkly revealed the Mexican electric system's heavy reliance on US natural gas,” said Yolanda Villegas, Legal Director, Envases. “It also underscored the urgent need to strengthen strategic reserves and improve storage infrastructure.”

Projects like the Puerta al Sureste gas pipeline and the expansion of the Mayakan system are expected to strengthen supply in the southeast and the Yucatan Peninsula. However, Cruz warned that their success will depend on timely investments in the necessary distribution branches. He also urged Mexico to focus on unlocking its unconventional reserves, which hold an estimated potential of 64Bboe, resources that could significantly reshape the country’s energy outlook.

“Mexico must overcome ideological and regulatory barriers to seize this opportunity while fostering technological and operational capabilities,” Cruz said.

Increasing production through the development of unconventional gas fields, particularly shale, is one of the most important steps forward for Cruz. According to the EIA, Mexico ranks sixth globally in technically recoverable shale oil and gas resources with 545Tcf. However, the potential ground and water contamination and increased seismic activity create a big barrier for these projects moving forward. 

In terms of reserves, Mexico currently holds 34.9Tcf, divided into proven (12.3Tcf), probable (11.0Tcf), and possible (11.6Tcf) categories. Based on production rates as of September 2024, the country’s combined reserves would be sufficient to meet national demand for approximately 21.1 years.

Beyond storage, natural gas transportation remains a significant bottleneck. While Mexico has a pipeline network exceeding 10,000km, alternative transportation methods could help deliver natural gas to underserved regions more quickly without the need for costly, long-term duct construction. Gamaliel Corral, General Manager, Morelos Gas Duct, suggested that small and medium-sized LNG terminals, along with natural gas compression and decompression plants, could play a key role in expanding supply.

“We still need far more infrastructure development and investment in gas pipelines and branches to connect natural gas to more interconnection points and end-users,” said Corral. “It is also critical to explore other transportation solutions in regions where major infrastructure projects are unlikely to materialize within the next decade.”

Follow our MBS 2025 tag and don’t miss our coverage leading to Mexico Business Summit 2025 on October 28–29, 2025. On Thursday, July 3, 2025, we will delve into the role of renewables and their adoption for industrial applications when compared to natural gas. 

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