Mexico is unlikely to substantially increase its natural gas production over the next five to six years, according to upstream regulator Comisión Nacional de Hidrocarburos (CNH).
In its latest “prospectiva” or outlook for oil and natural gas output, the regulator modeled high, low and medium production growth scenarios for each hydrocarbon.
The high case scenario for natural gas shows production peaking at 4.73 Bcf/d in 2026, then dropping to 4.26 Bcf/d by 2028. This compares to production of 4.06 Bcf/d recorded in August.
Under the medium scenario, production peaks at 4.24 Bcf/d in 2026 before falling to 3.68 Bcf/d in 2028.
Finally, under the low scenario, production starts falling immediately to average 3.78 Bcf/d in 2023 before rising slightly to a peak of 3.93 Bcf/d in 2025. Output then drops to 3.4 Bcf/d by 2028.
Mexico’s natural gas demand, meanwhile, is forecast to grow at an average annual rate of 1.4% during the 2021-2025 period, according to the International Energy Agency’s (IEA) latest quarterly gas market report.
Imports on the Rise
Mexico’s natural gas production is expected to “[continue] its declining trend” over the period, IEA researchers said, in line with the CNH modeling.
The decline in production, combined with a slow but steady rise in demand, are expected to drive continued growth in U.S. to Mexico gas flows.
North America’s net pipeline trade of natural gas “is expected to gradually increase thanks to higher U.S. flows to Mexico,” the IEA team said.
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U.S. exports to Mexico are expected to grow at an annual average rate of 4% over the forecast period, slowing from a previous 8% in 2017-2021 researchers said.
Imports, practically all of which come from the United States via pipeline, accounted for 69% of Mexico’s gas consumption as of June 2022, according to CNH data. Excluding gas produced and consumed by state oil company Petróleos Mexicanos (Pemex), imports supplied 86% of national demand.
Several LNG export projects are in the works in Mexico, with the objective of re-exporting gas imported by pipeline from the United States.
North America’s liquefied natural gas exports are set to rise by 46% or 44 Bcm over the 2021-2025 period as new liquefaction capacity – including the Energía Costa Azul terminal on Mexico’s Pacific Coast – comes online, IEA researchers said.
Although Mexico’s gas demand is expected to grow over the coming years, the country’s apparent natural gas consumption showed a slight year/year decline during the first quarter, IEA said. Researchers explained that “the limited increase in pipeline imports appeared insufficient to offset lower domestic production and LNG deliveries.”
U.S. pipeline deliveries during April-June showed nearly a 7% year/year decline, “indicating a further potential slowdown in Mexican gas demand,” researchers said.
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