Natural Gas: Mexico's Energy Engine for the Future

With the structuring and dissemination of Plan Mexico by the federal government, a strategic platform has been created to address the energy, economic, and environmental challenges our country will face in the coming years. These are not minor challenges; they encompass a wide range of strategic actions aimed at transitioning toward a more sustainable nation with greater industrial competitiveness. These challenges must be addressed over the coming years with a focus on ensuring energy security through 2040.

For this, it is crucial to turn our attention to the energy sector, specifically natural gas. Natural gas in Mexico will play a central role as a “transition fuel,” forming part of the backbone of all strategic development projects under Plan Mexico. It is not just a transition fuel: natural gas is and will remain the most relevant energy source in our country today. It is necessary to trigger the growth of development hubs, generate electricity, support decarbonization, enable the shift to clean energies (such as hydrogen), and provide cost-benefit advantages compared to other non-renewable sources. Considering that, it is also accessible both through imports and, eventually, through domestic production.

In the next 10 years, natural gas in Mexico will play a strategic role, supported by Mexico’s extensive transportation and distribution network and the eventual startup of pending interconnection projects (new pipelines and branches). These will be key to strengthening transport capacity and expanding access to more regions of the country, particularly the south, southeast, west, north, and central areas. This aligns with the industrial, transitional, and power-generation development hubs outlined in Plan Mexico. As new state-level and private development hubs emerge, access to natural gas transport and distribution networks will be essential.

Still, there are considerable challenges to ensure this energy source can reach the last mile in all regions that demand it. Over the past 15 years, strategic projects have expanded the natural gas infrastructure network (pipelines, interconnections, branches, and storage LNG terminals), all closely tied to the significant production and reserves of the United States, the world’s leading producer and exporter of natural gas. This has allowed Mexico access to some of the cheapest natural gas globally, making it the largest importer of US gas. Today, around 70% of the natural gas used in Mexico is imported from the United States, while 60% of national electricity production depends on natural gas for combined-cycle plants. In short, our energy system heavily depends on US reserves, production, and imports.

At first glance, this high dependence could seem a disadvantage and a risk. However, thanks to strategies by the Ministry of Energy (SENER), Mexico has strengthened its natural gas transport system. Strategic investments, particularly those led by the Federal Electricity Commission (CFE), have expanded transport capacity to meet the demand at combined-cycle power plants. Likewise, third-party investment in distribution networks has been essential to ensure last-mile delivery. Further strengthening comes from LNG storage terminals (operational and under development), interconnection branches, CNG, NGV, and small-scale LNG plants. Together, these initiatives are consolidating Mexico’s natural gas infrastructure, enabling broader coverage. The main challenge remains reducing dependence on US imports. The goal is to gradually flatten the import curve versus domestic production and renewable sources, moving from the current 70/30 balance to 60/40 in the medium term and ideally 50/50 in the long term.

This is a monumental challenge. Despite infrastructure progress, key tasks remain unresolved:

• Strategic storage: At least five-plus days of natural gas storage.
• Operational storage: To allow the national transmission operator (CENAGAS) and third-party operators to balance their systems and act as a buffer in emergencies.
• Expanded LNG storage capacity.
• Distributed LNG networks: To support new small- and medium-scale combined-cycle plants.
• More interconnection branches to extend network reach.
• Efficient use of CFE’s unused transport capacity as part of strategic storage.

Mexico has a clear roadmap: the federal government, SENER, CNE, CFE, PEMEX, CENAGAS, private players, and other institutional actors are aligned to develop strategic projects over the next 14 years. These will guarantee access to natural gas as an indispensable source for development, energy transition, and eventual decarbonization. Equally important is the leadership of the federal government in creating a competitive and accessible regulatory framework that encourages private-sector participation, not only in natural gas, but also in electricity and renewable energy.

Additionally, the role and guidelines played by the federal government through its subsidiary PEMEX are of utmost importance in order to increase domestic extraction capacity through specific projects that can trigger greater availability and accessibility of national natural gas. It should be noted that this is not a minor challenge, since we do not have the necessary infrastructure in the poles and basins of natural gas reserves necessary for the exploitation and eventual distribution of the non-renewable good. To this end, strategic plans must be created for extraction in unconventional wells, development of infrastructure that will not be minor, availability and openness to exploit basins through the use of different technologies and an expansion of infrastructure for the transport and distribution of natural gas. The commitment is not a minor undertaking: the challenge will also be very great. But it will be necessary for the natural gas sector and, to cover demand, for this to continue to be the transition energy to detonate the strategic projects of electricity generation and growth in industrial poles within the Mexico Plan. 

The future of Mexico and the viability of Plan Mexico will depend greatly on natural gas. It will not only be a transitional fuel, it will be the engine of industrial growth and the indispensable backbone of national electricity production. While risks remain (dependence on US imports, limited domestic production, insufficient storage and interconnections), pessimism is not warranted. The foundations of a long-term strategy are in place, with a clear, ambitious roadmap.

For this plan to succeed, the involvement of federal and state governments, regulators, industry, private actors, associations, and academia is essential. A broad coalition must be formed to consolidate natural gas as the guiding axis, trigger, and driver of the initiatives set out in Plan Mexico.