Mexico’s natural gas production in October rose to 3.93 Bcf/d, compared with 3.899 Bcf/d in the year-ago month.

Mexico production

October’s production was the highest of any month this year. The average to date in 2021 has been 3.837 Bcf/d, according to upstream regulator Comisión Nacional de Hidrocarburos (CNH). September production was 3.894 Bcf/d.

National oil company Petróleos Mexicanos (Pemex) supplied 3.725 Bcf/d of the total, with private sector companies adding 203 MMcf/d.

Mexican gas production peaked in 2009 at 6.534 Bcf/d, but it has been in steady decline since then. Gas production in 2020 was 3.844 Bcf/d. 

Mexico makes up for its supply shortfall through imports from the United States. Pipeline imports have consistently been above 6 Bcf/d this year and hovered around 7 Bcf/d at times during the summer.

Of the 7,086 producing wells in the country, 2,839 are gas only, according to CNH. The principal gas fields in the country in October, all operated by Pemex, were Quesqui (282 MMcf/d), Maloob (281 MMcf/d), Akal (268 MMcf/d), Ixachi (230 MMcf/d), and Zaap (207 MMcf/d).

Oil production also rose in October, to 1.652 million b/d, from 1.627 million b/d in the same period last year. Pemex supplied 1.584 million b/d of the total.

Although private sector oil and gas production remains relatively small, a new report by private sector operator association Amexhi found that independent companies in Mexico’s upstream have invested more than $18 billion in exploration and production since the country opened the market to outside investment in 2015. 

A total of $42 billion in investment has been approved, and the 15 announced discoveries by the private sector amount to reserves of 2 billion bbl of oil, Amexhi said.

IPGN Prices Up Again

Mexico natural gas prices jumped to $5.19/MMBtu in October compared to September prices of $4.69, according to the latest IPGN monthly index published by the Comisión Reguladora de Energía (CRE). Gas prices in October 2020 averaged $3.10. 

Beyond the freakish prices recorded during the Texas freeze in February, the October prices were for the fourth consecutive month the highest on record since the IPGN was launched in 2017. The CRE used 331 transactions from information provided by 31 marketers to calculate the October index.

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Mexican natural gas prices track closely to pricing changes in the United States. In NGI’s latest survey of the market in August, Mexican natural gas deals tied to U.S indexes climbed for the third consecutive survey, reaching 76%. This was up from 72% in the March survey.

The U.S. Energy Information Administration (EIA) reported an average Henry Hub spot price of $5.51 for October from $5.16 in September and well above the $3.25 average seen through the first half of 2021.

The EIA is forecasting Henry Hub prices will average $5.53 during the winter months before declining to an average of $3.93 in 2022.