Generic Hero BannerGeneric Hero Banner
Latest Market News

Viewpoint: Mexico reliance on US gas to strengthen

  • Spanish Market: Electricity, Natural gas
  • 03/01/22

Mexico's demand for US natural gas grew to a record high in 2021, with imports expected to grow in 2022 despite political uncertainty.

Even as President Andres Manuel Lopez Obrador calls for energy independence, Mexico remains heavily reliant on gas imports for power generation, most of which comes into the country via US pipeline interconnections. Gas imports from the US made up 76pc of Mexico's supplies by the middle of 2021, according to the US Energy Information Administration (EIA), a 36 percentage point increase from the same time in 2015.

US exports by pipeline to Mexico averaged around 6 Bcf/d (170mn m³) in January-August, according to EIA data, 12pc higher than the same eight months in 2020. Pipeline exports reached a peak of 7.4 Bcf/d on 17 June as cooling needs combined with recovering industrial demand from the Covid-19 pandemic.

Mexico's own gas production and LNG imports have fallen as pipelines between the two countries come on line. State-owned Pemex produced an average 4.6 Bcf/d of gas in October, down by 4.1pc from the same time in 2020.Pemex aims to boost production to 5.25 Bcf/d of natural gas by 2022, but it has frequently missed output targets.

Gas demand will likely increase over the next several years as Mexico's electricity needs grow with industrial activity returning to pre-pandemic levels. Though power reform remains a key 2022 concern among the country's business community, the question is whether Mexico's public sector can provide sufficient generation capacity, not whether demand will abate.

Lopez Obrador sent a constitutional electricity reform bill to congress in October that would cap private-sector participation at 46pc. The move would cancel private-sector permits for power generation totaling 40,924MW, or 48pc, of Mexico's installed capacity, essentially making Mexico's state-owned Federal Electricity Commission (CFE) dominant in the power sector.

CFE has announced plans for several power plants, indicating expected demand growth. Though little public information is available, CFE's combined projects would increase gas demand in Mexico by approximately 785mn cf/d, according to Eduardo Prud'homme, co-partner at energy consulting firm Gadex. More than half of the projects have estimated start dates of 2024.

Despite the anticipated demand growth for gas-fired power, private-sector investments for gas and power in Mexico are uncertain following Lopez Obrador's shift away from 2013 energy policy reforms. Lopez Obrador's regulatory and legislative moveshave led to postponements of power and manufacturing projects, potentially stunting growth through the remainder of his term, which is set to end in September 2024.

Increased gas interconnection projects within Mexico remain jammed by environmental grievances, negotiations with state agencies and other political issues. TC Energy has repeatedly postponed the completion of its 886mn cf/d Tula-Villa de Reyes natural gas pipeline to 2022. Delays first stemmed from issues related to the Covid-19 pandemic, followed by contract negotiations with CFE. Other lines have been delayed as indigenous groups opposed the pipeline routes.

But pipelines connecting to Mexico have continued to progress in the US, increasing potential US export capacity. The 2 Bcf/d Whistler pipeline — which came on line in July — added a new connection from the Permian basin of west Texas and New Mexico to the Agua Dulce Hub in southeast Texas. Agua Dulce is a supply point for several pipelines that cross the Texas-Mexico border.

TC Energy plans to expand its North Baja natural gas pipeline system — which serves power generators in southern California and Mexico's Baja Peninsula — with a potential startup in 2022, according to EIA data.

Mexico's gas market conditions have also started to more closely track US market conditions as the US-Mexico pipeline network has expanded, particularly between northern Mexico states and west US hubs. Prices at the Waha hub — the main indicator for the value of Permian gas — averaged $3.28/mmBtu for flow in December 2021, up by 36pc from December 2020. The El Encino index in Chihuahua state, which is supplied by the Permian basin, averaged $3.89/mmBtu for December 2021, a 61¢/mmBtu premium to Waha for the same period. El Encino prices averaged a slightly wider 68¢/mmBtu premium in November 2021.


Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

16/05/25

Kuwait's Kufpec gets OK to develop Indonesian gas field

Kuwait's Kufpec gets OK to develop Indonesian gas field

Singapore, 16 May (Argus) — Kuwait's Kufpec, a unit of state-owned KPC, has won approval from the Indonesian government for a plan of development for the Anambas gas field located in the West Natuna Sea offshore Indonesia. The Anambas field is located in the Natuna basin and has an estimated gas output of about 55mn ft³/d. Kufpec will invest around $1.54bn into the development of the field, which is planned to come on stream in 2028. The approved plan of development outlines a phased strategy to unlock the gas and condensate potential of the field, said upstream regulator SKK Migas. The regulator will encourage Kufpec to accelerate efforts and bring the project on stream by the fourth quarter of 2027, said the head of SKK Migas, Djoko Siswanto. The development of the field will include drilling production wells and installing subsea pipelines to transport gas from Anambas to existing facilities in the West Natuna transportation system. Kufpec in 2022 announced the discovery of gas and condensate at the Anambas-2X well in the Anambas block. The Anambas block was awarded to Kufpec Indonesia in 2019 through a bidding process. The company holds a 100pc participating interest in the block and has a 30-year production sharing licence, including a six-year exploration period. The approval of the plan of development marks a step towards the project's final investment decision. It also shows that the upstream oil and gas sector in Indonesia is still attractive to domestic and foreign firms, said Djoko. The field is expected to be able to transport gas to domestic and regional markets, support Indonesia's energy security, and drive economic growth, according to SKK Migas. Indonesia continues to prioritise oil and gas expansion to maintain economic growth. Investment in oil and gas rose from $14.9bn in 2023 to $17.5bn in 2024, according to the country's energy ministry. By Prethika Nair Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Austrian PV additions fall 100MW on year in 1Q


15/05/25
15/05/25

Austrian PV additions fall 100MW on year in 1Q

London, 15 May (Argus) — Austrian solar photovoltaic (PV) capacity additions fell by around 100MW on the year in the first quarter of 2025, solar association PV Austria told Argus , a decrease of around 20pc. Newly installed PV capacity in January-March stood at 399MW, PV Austria said, compared with 497MW added in the first quarter of last year, according to data from grid regulator E-control. But late reports from Austria's distribution system operators may still cause a slight uptick in capacity addition numbers for the last quarter, PV Austria said. The association largely attributed the fall in solar additions to uncertainty around government policies, which "compromised" planning security and "jeopardised" investments into renewable energy, it told Argus . And it cited the "abrupt" end of the VAT exemption for small PV systems as well as the extension and tightening of the energy crisis contribution as further reasons for the decline. PV Austria called on the government to pass the electricity industry act (ElWG) and the renewable energy expansion acceleration act (EABG) as soon as possible. The government in February pledged to pass the ElWG in the summer of this year. Austria had just under 8.3GW of solar capacity installed as of the start of January, the latest data from transmission system operator APG show. Solar output more than doubled on the year in 2024 and APG has several times highlighted the challenges posed by increased PV capacity for demand forecasting and grid stability during times of solar peaks, when excess power must either be transported abroad or to storage power plants and can also lead to curtailments at wind and hydropower units. By John Horstmann Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

UK establishes public energy company


15/05/25
15/05/25

UK establishes public energy company

London, 15 May (Argus) — The UK parliament has passed a bill establishing a publicly owned energy company, Great British Energy (GBE), to support the nation's renewable energy ambitions. The company, funded with £8.3bn ($11.02bn) over the current parliamentary term, aims to accelerate renewable energy projects, enhance energy security, and support job creation, the department for energy security and net zero (Desnz) announced on Thursday. GBE will invest in clean energy initiatives, including technologies such as floating offshore wind, and collaborate with private companies to expand renewable energy capacity. The government states the company will help stabilise energy costs by reducing reliance on fossil fuels. The bill includes £200mn for renewable energy projects, such as rooftop solar for schools, hospitals, and communities. It has also committed £300mn to develop the UK's offshore wind supply chain, supporting manufacturing of components such as cables and platforms. The legislation received approval from the devolved governments of Scotland, Wales, and Northern Ireland, enabling GBE to operate across the UK. Desnz secretary of state Ed Miliband is expected to outline GBE's strategic priorities "soon", specifying technology focus areas and investment criteria. The government sees GBE as a key part of its plan to transition to clean energy and stimulate economic growth through a "modern industrial strategy", it said. Industry body Energy UK welcomed the bill's passage. "[GBE] can play a vital role in making the government's clean energy ambitions a reality by attracting extra private sector investment," chief executive Dhara Vyas said. By Timothy Santonastaso Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Greece’s Alexandroupolis LNG off line until mid-Aug


15/05/25
15/05/25

Greece’s Alexandroupolis LNG off line until mid-Aug

London, 15 May (Argus) — Greece's 4.3mn t/yr Alexandroupolis LNG import terminal will remain off line until 15 August, after which it will return to 25pc of capacity for the remainder of the gas year, an updated urgent market message (UMM) from operator Gastrade says. The terminal has been off line since 28 January because of damage to the booster pumps on the floating storage and regasification unit, Gastrade said, and it will remain fully unavailable until 15 August, after which onward regasification services will resume capped at 25pc of maximum capacity, or about 42 GWh/d, with available redundancy for the booster pumps. This availability will be offered for 15 August-30 September only under "certain operational and commercial conditions", Gastrade specified, and several market participants were unsure of what this phrase meant or whether regasification would in fact be possible at all during this period. From the start of the new gas year on 1 October, the 25pc cap will be lifted, but "certain operation constraints may remain for a limited period of time", the operator said. The previous version of the the UMM listed the shutdown end date as 15 May, although Gastrade had already told Argus in April that it did not expect to return to full operations until October . By Brendan A'Hearn Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

SEFE sells only 900GWh of Rehden gas storage space


15/05/25
15/05/25

SEFE sells only 900GWh of Rehden gas storage space

London, 15 May (Argus) — German gas storage operator Sefe sold less than a fifth of the capacity on offer at its Rehden site in an auction on Thursday — the first capacity sold at the site for the current storage year. Sefe offered 5TWh and received bids in excess of this, but said it allocated only 900GWh, suggesting most bids were below its reserve price. German THE prices for delivery over the remainder of the summer, including the balance-of-May market, closed €2.08/MWh below the following winter price and €2.18/MWh below the first-quarter 2026 price on Wednesday. The 900GWh was the first allocated space at the site for the current storage year, after one unsuccessful auction in January and one last week. The German government last month halved the mandatory fill level at the site to 45pc by 1 November. Now there is capacity booked, there might be scope for Rehden not to be fully emptied, given that there is still 1.1TWh of gas in the 45TWh site. There is a two-month period during which capacity holders can withdraw their gas after the beginning of the storage year, and withdrawals have continued at the site since 1 April. Sefe said it will publish further details on upcoming auctions for the capacity not yet marketed "in a timely manner". Injections at Rehden would have to start by 17 August to meet the 45pc mandate, according to Argus calculations, factoring in 18.5 days of maintenance in October. Under the previous 90pc mandate, injections would have had to start before the end of May, taking Rehden's injection curve into account. By Till Stehr Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Generic Hero Banner

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more