Natural Gas Essential for the Transisthmus

The promotion of natural gas transportation and distribution infrastructure in southeastern Mexico is an indispensable step in the gasification of this region and the completion of the regional development project underway with the Transisthmian Train.

This project, also known as the Isthmus of Tehuantepec Interoceanic Corridor (CIIT), has immense potential as a key driver of regional development in southeastern Mexico, capable of significantly altering international trade routes.

However, the successful implementation of this ambitious plan requires an industrial public policy that accelerates the installation of pipelines and the necessary infrastructure to facilitate a more efficient delivery of natural gas to the southeastern region.

The Interoceanic Corridor aims to connect the Pacific and Atlantic Oceans through the development and implementation of railways. In addition, an intermodal logistics platform will be established to integrate rail, sea and road transport. While this idea has been on the drawing board for years, important progress has been made to activate it.

The main route is a railway that will connect Salina Cruz in Oaxaca with Coatzacoalcos in Veracruz. In addition, there are proposals for connecting lines that will cover the entire southeast, including ports in Chiapas and Tabasco.

In terms of industrial development, there are plans to set up 10 industrial parks, known as “'poles,” along the route. The government has already put five of these out to tender. Natural gas transmission and distribution infrastructure will be needed to serve them. 

At each development pole, the aim is to exploit a different vocation for the establishment of private companies in various fields. At present, 11 economic sectors have been identified, including electronics, electrical engineering, automotive, automotive parts, machinery and equipment, pharmaceuticals and metals.

All the companies to be set up require a reliable source of energy, which would be provided by natural gas, without which the development of this major industrial project would be impossible. The National Center for Natural Gas Control has indicated that the demand from the industries to be installed will be approximately 11.31 million cubic feet of natural gas per day.

If the Transisthmus Train is completed as planned, it would attract commercial cargo from Asia that could cross the country and head to the East Coast of the United States, in addition to receiving cargo from South America. It represents a significant change in global trade routes, even competing with the Panama Canal.

It is worth noting that the installation of industry and the resulting logistical and commercial movements have the potential to improve the lives of the people of Veracruz, Oaxaca, Tabasco and Chiapas.

The completion of the Transisthmian project would therefore be crucial to Mexico's industrial and social development.

It is a critical moment for public policy to work with industry to create the conditions for the expansion of natural gas infrastructure throughout the southeast.

Natural gas has already demonstrated its positive impact on the local economy, and its availability in the northern states and the Bajio region has been key to the development of industry in these areas. In addition, there is the advantage of the large reserves of natural gas in North America at competitive prices.

In addition to its contribution to the local economy, natural gas will play a very important role in Mexico's energy transition. As we have said before in this space, because it is an energy source with lower emissions than other fossil fuels, natural gas is the bridge Mexico needs to transition to the use of renewable energy. In this respect, its inclusion in the energy matrix is essential.

If there were not already enough reasons to support investments in natural gas, the acceleration of nearshoring or plant relocation as a new paradigm guiding global investments provides another. Mexico is already reaping the benefits thanks to its geographic position and trade agreement with North America. It's worth remembering that for most large companies, natural gas supports their sustainability strategies due to its low emissions and thus, it is a valuable energy source.

For all of the above, it is conceivable that this propitious context — similar to that currently set up to allure foreign direct investment and sustain economic and social progress — may not be replicated in the near future. Moreover, it is crucial to note that macroeconomic stability is anticipated in Mexico for the medium term, despite the modest growth forecast for gross domestic product. Nevertheless, prognoses may improve through the implementation of further investments.

The greatest challenge is to reach a mutual consensus among various stakeholders linked to the industry, comprising firms, national and regional authorities, and even lawmakers. Such alignment is vital for stimulating the economy and attaining sustainable growth to exhibit the nation's creditworthiness for large investment.

Natural gas plays a pivotal role in establishing that agreement.