Mexico is looking for ways to reduce its dependency on U.S. natural gas imports

According to Oilprice.com, one of the most recognized sources for oil & energy news website, Mexico is looking for ways to reduce its overwhelming dependency on U.S. natural gas imports, which currently satisfy over 50 percent of its demand. This is the highest foreign gas dependency rate in the world, according to a senior adviser to Mexico’s president Andres Manuel Lopez Obrador.

S&P Global Platts quotes Abel Hibert as saying that Mexico needed to diversify its sources of natural gas but also its entire energy supply as the overdependency on U.S. gas constitutes the “greatest strategic risk” for the country. That’s especially true in light of the fact that Mexico uses natural gas for over 60 percent of its power generation: a much higher portion than other gas import-dependent countries in the world.

One way that Pemex is already pursuing of reducing Mexico’s dependence on imported gas is through expansion of domestic production. The company plans to increase this to 5.7 billion cubic feet daily by 2024. This, however, will not be enough to solve the problem because gas demand will also grow, at a faster clip: by 2024 the Mexican energy ministry has forecast it will reach 8.7 billion cu ft daily.

The U.S. Energy Information Administration last year projected a substantial increase in U.S. exports to the south. Last year, these were between 4 and 5 billion cu ft daily, hitting the highest on record in August, at 5.1 billion cubic feet daily, according to EIA data. This rate of exports, by the way, makes Mexico the single largest market for U.S. pipeline gas exports, which the EIA last year projected will average 7 billion cu ft daily, rising to 8.5 billion cu ft daily this year, not least thanks to growing Mexico demand.

Mexico needs more geothermal and hydropower, Hibert said, as a means of supply diversification, and it needs financial help from the private sector. Pemex and state utility CFE cannot foot the bill for this diversification alone, the adviser said, adding proposals are being explored at the moment for joint action on energy security.

By Irina Slav

Source: Oilprice.com