The gap between natural gas production and demand in Mexico continued to widen in 2021, according to the 71st edition of BP plc’s Statistical Review of World Energy published Tuesday.

Mexico demand

Mexico’s gas output fell to 29.2 billion cubic meters (Bcm) in 2021 from 30.5 Bcm in 2020 and 34 Bcm in 2019, researchers said. 

The country’s natural gas consumption, meanwhile, rose by 5.4% year/year to 88.2 Bcm in 2021, surpassing the pre-pandemic annual figure of 88 Bcm recorded in 2019.

Pipeline gas imports from the United States totaled 58.7 Bcm last year, up from 54.3 Bcm in 2020 and 50.8 Bcm in 2019.

Pipeline imports from the United States have mostly displaced liquefied natural gas imports into Mexico, which totaled 0.9 Bcm in 2021, BP said. This was down from 2.5 Bcm in 2020 and 6.6 Bcm in 2019.

So far in 2022, Texas has been responsible for over 91% of gas exports to Mexico, according to new analysis from BTU Analytics. While South Texas remains the dominant source of those flows, West Texas is rapidly gaining ground due to new pipeline infrastructure coming online in Mexico, analysts said. 

BP, by far the largest natural gas marketer by volume in North America, has capitalized on Mexico’s growing reliance on U.S. gas. BP established a gas marketing presence in the country after a constitutional energy reform opened the sector to private competition. 

However, state-owned Comisión Federal de Electricidad (CFE) and Petróleos Mexicanos (Pemex) remain the country’s dominant marketers.

A recent directive from energy ministry Sener appears poised to solidify Pemex and CFE’s primacy by requiring users on the Sistrangas national pipeline grid to purchase gas from one of the two state-owned players.

Power generation in Mexico totaled 336 TWh in 2021, up from 325.7 TWh in 2020 but below the pre-pandemic total of 344.6 TWh in 2019, BP researchers said. Natural gas-fired plants supplied about 203 TWh or 62% of that amount, up from 200 Twh in 2020. Hydroelectricity saw the biggest year/year jump among the country’s power sources, rising to 34.7 TWh from 26.9 TWh. Oil-fired generation inched upward to 32.8 TWh from 32.4 TWh, while coal output dropped to 13.6 Twh from 18.9 TWh.

Natural gas flaring in Mexico totaled 7.8 Bcm in 2021, up from 6.7 Bcm in 2020 and 5.3 Bcm in 2019, researchers said. 

Mexico’s carbon dioxide (CO2) emissions from energy rose to 373.8 million metric tons (mmt) in 2021 from 357.7 mmt in pandemic-ravaged 2020, a growth trend in line with North America and the world.

The country’s CO2 equivalent emissions from energy, process emissions, methane and flaring totaled 444 mmt, up from 424.7 mmt in 2020 but below the 511.5 mmt recorded in 2020.

Pemex has drawn scrutiny for excessive flaring and methane leakage at its production and processing operations. President Andrés Manuel López Obrador recently said the firm would invest $2 billion to curb methane leakage. 

Canada and the United States continued to dwarf Mexico in terms of annual primary energy consumption per capita. This metric was 364.4 GJ for Canada, versus 279.9 GJ for the United States and 52.1 GJ in Mexico, according to BP.

Demand Roars Back

Globally, with people back to work and on the road following the relentless Covid restrictions in 2020, energy consumption made a historic comeback last year – particularly natural gas and renewables – according to BP.

Primary energy demand rebounded overall by 5.8%, eclipsing the pre-Covid levels in 2019, researchers said.

Chief economist Spencer Dale, whose team compiles the industry’s energy bible, warned, though, that the “challenges and uncertainties facing the global energy system are at their greatest for almost 50 years, at the time of the last great energy shocks of the 1970s.”

The most immediate concern for now, Dale said, is the energy impact following Russia’s invasion of Ukraine, which has upended natural gas and oil markets. 

“The war also threatens to lead to shortages in food and energy, which could detract materially from health and wellbeing across the globe,” Dale said. “From an energy perspective, the growing shortages and increasing prices highlight the continuing importance of energy ‘security’ and ‘affordability’ alongside ‘lower carbon’ when addressing the energy trilemma.”

The war also parallels the continued need for global economies “to achieve a deep and rapid decarbonization” in line with the United Nations climate accord, aka the Paris Agreement. 

“Considerable progress has been made in sovereign pledges to achieve net zero,” Dale said, “but in global aggregate terms, those growing ambitions have yet to translate into tangible progress on the ground.” Carbon emissions “have risen every year since the Paris goals were agreed,” except in 2020 because of the pandemic. 

“The world remains on an unsustainable path.”

In addition, as worldwide economic activity recovers, energy consumption is expanding sharply, “increasing the demands on available energy supplies, and highlighting fragilities in the system.”

Rebounding Natural Gas Prices

Natural gas prices last year jumped across all three major gas regions – in Asia, Europe and the United States. 

“Henry Hub prices nearly doubled to average $3.80/MMBtu in 2021 – their highest annual level since 2014,” BP researchers noted. 

Prices in Europe were up fourfold to record annual levels, with the Title Transfer Facility averaging $16/MMBtu. In Asia, liquefied natural gas (LNG) spot market prices tripled, with the Japan Korea Marker averaging $18.60.

“Global natural gas demand grew 5.3% in 2021, recovering above pre-pandemic 2019 levels and crossing the 4 trillion cubic meter (Tcm) mark for the first time,” BP reported. However, the share of natural gas in primary energy last year was unchanged from the previous year at 24%.

Last year, global LNG supply grew by 5.6% year/year, up 26 billion cubic meters (Bcm) to 516 Bcm. That was the “slowest rate of growth since 2015 (other than in 2020),” the researchers noted. 

“LNG supply from the U.S. rose by 34 Bcm, accounting for most of the new incremental supplies and more than offsetting declines from mainly other Atlantic Basin exporters.”

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What’s Driving Energy Growth? Renewables

Meanwhile, primary energy demand in 2021” is estimated to be more than 1% above its 2019 level,” Dale noted. 

The increase was driven by emerging economies, mostly reflecting growth in China. In contrast, energy demand in developed economies was 8 exajoules (EJ) below 2019 levels. 

“The increase in primary energy between 2019 and 2021 was entirely driven by renewable energy sources,” according to BP. ‘The level of fossil fuel energy consumption was unchanged between 2019 and 2021, with lower oil demand (minus 8 EJ) offset by higher natural gas (5 EJ) and coal (3 EJ) consumption.”

Dale said it was encouraging that renewable energy, led by wind and solar, “continued to grow strongly” last year, and it now accounts for 13% of total generation. 

“Renewable generation (excluding hydro) increased by almost 17% in 2021 and accounted for over half of the increase in global power generation over the past two years.”

Carolyn Davis contributed to this story.