Maria Jose Trevino Headshot

Editor’s Note: NGI’s Mexico Gas Price Index, a leader tracking Mexico natural gas market reform, is offering the following question-and-answer (Q&A) column as part of a regular interview series with experts in the Mexican natural gas market.

This 37th Q&A in the series is with María José Treviño, Country Manager at Acclaim Energy Mexico, an independent consultancy that works with North American commercial and industrial consumers to identify and implement supply strategies and risk control for companies that participate in deregulated markets. Acclaim manages more than $2.5 billion in energy spending a year and is dedicated to analyzing and negotiating gas and electricity supply contracts, analysis and management of price-risk, and energy management in order to generate savings and mitigate risks for high energy consuming companies.

Treviño has been with Acclaim since 2017, where she served as the Business Development Director in Mexico prior to becoming Country Manager in 2019. She is the Founding Board Member for Women’s Energy Network Mexico, its first international chapter.

Additionally, Treviño is a member of the Mexican Council on Foreign Affairs (COMEXI) and sits on the board at Cox Energy Americas, the first renewable energy company to launch an IPO in Latin America. Prior to joining Acclaim, she co-founded the Mexico Green Energy consultancy in 2014.

Treviño holds a Master of Business Administration (MBA) degree from IPADE Business School and a bachelor’s degree from Trinity University in San Antonio. 

NGI: We’ve seen a lot of changes in the Mexican energy sector in the last year and a half or so. What is your take on some of the changes in the industry and how have they impacted the sector in a positive and/or negative way?

Treviño: It is difficult to define in a concrete way the positive impacts on the energy sector in the last 18 months. It seems that the current environment is one of considerable uncertainty, and that there have been a lot of changes that don’t necessarily have a strategic benefit for Mexico. 

For me, as someone who works for an energy consultancy, it is very important to interpret and observe the regulatory changes that have been implemented and how they impact market participants. Our role is to assist our clients in devising strategies that incorporate these changes to their benefit and help them achieve their objectives in Mexico.  

The positive changes that I’ve seen in the current scenario are:

1)    The level of competition in the wholesale electricity market. As a result of the energy industry opening in Mexico, there is now adequate competition and providers supplying service to final consumers. 

2)    Linked to electricity demand is of course natural gas, of which Mexico needs a significant amount. The demand for natural gas in Mexico is of course very high, and that gas feeds electricity generation plants. As a result, that service is focused much more on providing value to the end consumer. 

3)    The current and growing demand by consumers for lower cost energy, preferably through more sustainable sources, creates opportunity for the continued development of the energy sector.

4)    The world continues to move towards a model that incorporates more renewable energy options, and many markets and consumers are looking to increase clean energy generation while moving away from coal.

The policies announced by Mexico against renewable energies provoked a reaction in the industry among equity funds, chambers and other countries that want to save and maintain the efforts of the sector to develop clean energies. And, though the confrontation between the government and the public initiative isn’t ideal, the reactions by the industry were very positive, particularly the courts that defended the future of renewable energy development in Mexico.

NGI: How do you think the situation between the Mexican government and renewable energy industry will evolve?  

Treviño: I think it will definitely require an effort by both parties – the private industry and the government – to establish a consistent message. Mexican citizens need and deserve a steady message about where their energy is coming from, how it is produced and the actions being taken to optimize costs.  A congruent strategy is needed for the well-being of the Mexican economy. 

We need to have reliability in infrastructure and in the creation of clear rules so that the industry feels confident that the contracts with private companies already active and moving forward are respected. Economics should also be well defined around development and operational mechanisms to confirm project viability and support market participants. 

In my opinion, the priority should be to create a strategic plan where the rules are completely clear and concrete so that companies have the confidence to invest and coexist in the Mexican industry.

NGI: In the previous administration, the opening of the industry generated a lot of international interest in Mexico and we saw large scale players from across the world entering and investing in the country. Do you think, given the changes in the industry in the last two years, that Mexico is now less attractive as an investment destination? 

Treviño: As a result of the current state of uncertainty in the industry, this is perhaps the case. However, Mexico will always be attractive. We have natural resources, and we have demand. 

Given the fortunate geographic elements and location of Mexico, we have endless natural resources available that we can develop through technology and infrastructure to create economically viable schemes to generate energy and attend to the country’s growing demand, which increases at a rate of about 3-4% annually. 

Additionally, the continual increases in demand for electricity in Mexico have been accompanied by more demand for energies that contaminate less. So, there continues to be an opportunity to invest in the electricity sector in Mexico and we are starting to see large international oil and gas companies, such as Shell or BP or other majors, beginning to modify their strategies to incorporate more alternative energy development. 

As we observe more large energy companies in the industry moving towards renewable projects, Mexico, given the amount of natural resources we have here and the increasing demand for electricity, continues to be an attractive option in the world market. 

NGI: Given these vast natural resources that Mexico has, where do you see the best opportunities for future growth in the Mexican energy sector? 

Treviño: I have always said that the needs of the market — and the demand to meet those needs — has always driven opportunities and interest throughout the productive process and supply chain. 

I see a very clear opportunity for consumers and for market players to focus on consumer natural gas and electricity corporate acquisition and procurement tendencies. I work very closely with and collaborate with large energy consumers in the commercial and industrial sectors. With time, these consumers are realizing the opportunities that already exist in the Mexican market and are seeking synergies and relationships with other members of the industry that are already operating in the country. This, as I mentioned earlier, is driven by increased demand and the constant desire to reduce costs and gain control and visibility of their budgets through the negotiation of beneficial terms. 

With respect to new opportunities for competition, the growth prospects for less contaminating energy sources, if fair terms and conditions are created that work well for market participants, would allow for much more personalized form of service. The demand is there and will continue to be there. What’s most important is how these opportunities are allowed to be developed in the most efficient and beneficial way. 

NGI: With the announcement of López Obrador’s infrastructure plan pending, what natural gas projects do you think Mexico needs to develop? 

Treviño: I would say that the natural gas projects that are developed should be done in fusion with electricity projects. I think one thing that should be considered is: where is there existing infrastructure already in place, and where can the lowest prices be achieved? I think, with more coordination, electricity costs can be lowered if projects are developed in concert with existing natural gas infrastructure. 

As I mentioned earlier, I think that this could be accomplished if there was a more strategic plan in place that combines natural gas and electricity projects. The two coexist, and if done in a more congruent, coordinated way, Mexico could see lowered generation and production costs in certain areas of the country. As we know, there are distinct areas of the country where natural gas infrastructure is very limited, such as the Yucatán peninsula. I think that if there was a more coordinated plan to develop natural gas infrastructure that better combines with electricity projects, the demand of some of the regions in need could be better met. 

NGI: The natural gas imports from the U.S. continue to increase here in Mexico. Do you see that trend continuing, particularly given the amount of natural gas production in some of the west Texas basins? 

Treviño: I think that, with the natural gas prices so low that we’re seeing in Texas, it creates an ideal moment for Mexico to continue to take advantage of such low prices. Currently, it is working and benefits both parties. Mexico can acquire natural gas at low prices, and Texas has a dependable buyer with increasing demand. 

However, it is necessary, at the same time, to consider how to better develop natural gas infrastructure options within Mexico. Distribution of the imported natural gas within Mexico is limited, and it is known that a more robust pipeline network would improve transportation efficiency. 

NGI: In your opinion, what could be done by the Mexican government to strengthen the energy sector in the short term? 

Treviño: Similar to some of the things we’ve discussed, we need to create reliability within in the industry, additional infrastructure, a more robust distribution network for natural gas and electricity, clear rules to improve contractual confidence, better cost-benefit scenarios for investors to improve savings for consumers, and, above all, to maintain active competition so that it challenges market participants to be at their very best. This is, in my opinion, the most important to assure that participants are challenged to create and deliver the best systems, technology, science and offer the best possible terms and solutions. Because at the end of the day, the idea is to create a win-win between the Mexican government, market participants and consumers, so that they all benefit. 

NGI: Do you think there is currently a fear in the industry that the government might attempt to modify, or even cancel, contracts signed in the previous administration? 

Treviño: Currently, there is not much fear of contracts between commercial and industrial consumers and generators or suppliers being cancelled. The uncertainty lies around the unclear rules of the game. At Acclaim, we are hired to give commercial and industrial consumers an unbiased perspective about what is in their best interest and what the options are given current regulations and state of the market. Understanding all pieces of the puzzle and interpreting how to bring them together to match consumption, risk and situational profiles is key to making informed decisions. There is no right answer for all, rather need to proactively navigate and manage your way through the updates. 

What we have seen is that the change or increase in transmission and distribution rates for self-supply (legacy) contracts for renewables and efficient cogeneration has generated uncertainty. And that has created a certain worry about what other rules could be changed. Companies want to know what other costs could be imposed or if the contracted rates could be changed. And, as a result, these changes have weakened transparency in the market.

Despite this, we have actually seen a lot of activity in the market. The fear applies to some participants, while it doesn’t for others. The changes or adjustments that the government is making or is intending to implement could affect the end cost of energy, which will only drive consumers to keep looking for other options that drive away from the more expensive and less eco-friendly regulated source. 

NGI: One thing that has been circulating in the industry is that the government is contemplating changes or even the reversal of the energy reform. Do you think that could be a real possibility? 
Treviño: I don’t see it likely that there could be a full-on reversal of the energy reform, though one thing that is happening is that the participation of private companies continues to face more obstacles. The political discourse has been clear, though I think the reality is that Mexico must continue to combine public and private sectors in the energy industry. This particularly applies to private companies that have extensive experience, technology, efficiency, and, most importantly, the available capital to finance the very necessary projects that Mexico needs.