Natural Gas Production Up 6.5%, Driven by PEMEX

Natural gas production in Mexico averaged 4.25Bcf/d in January, up from 3.99Bcf/d in January 2022. According to CNH, PEMEX supplied 4.03Bcf/d of the total, an increase from the 3.77Bcf/d that it supplied the previous year. Meanwhile, private operators produced 224MMcf/d, a decrease from 226MMcf/d in 2021.

The main five natural gas-producing fields operated by PEMEX were Quesqui, Ixachi, Maloob, Akal and Ku. Among the country’s top private producers are Verdad Exploration Mexico, which in February became the first non-state-owned producer to develop gas in the onshore Burgos Basin and connect to the CENAGAS national pipeline network. 

After President López Obrador halted bidding rounds in 2018, experts highlighted the importance of resuming the rounds for Mexico to return to a long-term path of production growth and mitigate dependence on gas imports from the US. Nevertheless, through the development of the onshore fields of Quesqui and Ixachi, PEMEX has been able to alleviate years of consecutive production declines. 

Although the NOC reported a loss of US$9.4 billion in 4Q22, it managed to achieve a 5% year-over-year increase in natural gas production, according to Natural Gas Intelligence. What is more, imports of Mexico’s total gas supply in September 2022 represented 68%, a 3% decrease compared to September 2021. In September 2022, Mexico sourced 82% of its gas from imports in contrast to 88% the year before.

According to Ana Laura Ludlow, VP Chief Government Affairs and Sustainability, Engie, natural gas in Mexico is already a part of decarbonization strategies as it is used to meet the needs of the sector for which direct electrification is not possible. Examples include industries like heavy transport and heating. Another purpose is to limit the costs of the energy transition as a cheap power source to produce electricity.

Other experts have also said that natural gas is a crucial element for the energy transition. Coupled with the acceleration of nearshoring and increasing national energy demand, Mexico must strategically plan to reinforce its energy system, though the government’s desired limited private participation in the electricity sector cuts off investment streams. Experts have addressed the importance of private investment to fund much-needed energy infrastructure upgrades. What is more, industries looking to relocate to the country will greatly increase energy demand.