A perfect storm emerges as natural gas markets are rocked by surging post-pandemic demand, constrained production growth, and Russia’s invasion of Ukraine. Perhaps not since the 1970s has the world faced an energy crisis of this magnitude.
In Mexico, the repercussions of a global energy
squeeze are being felt in myriad ways. Higher oil
and gas prices are leading to a degree of renewed
activity in the upstream sector, both among private
sector players and state oil and gas firm Pemex.
Additionally, offtaker interest for as many as four
liquefied natural gas (LNG) projects on the country’s
Pacific Coast is surging.
"The Perfect Storm" Special Edition assesses the state of
Mexico’s natural gas market in what will be surely
remembered as a transformational time and paints a picture of what to expect
in the months and years to come.
The Special Edition Includes...
The value of cross-border energy trade between the United States and Mexico reached a nine-year high of $42 billion in 2021, according to the U.S. Energy Information Administration (EIA).
The management teams of Halliburton Co., Baker Hughes Co. and Schlumberger Ltd. each reported strong year/year growth in the region during their respective first quarter earnings calls, and indicated they expect the trend to continue.
Sempra’s 3.25 million metric tons/year (mmty) ECA liquefied natural gas (LNG) Phase 1 terminal is expected online in 2024. A second-phase 12 mmty train could also be developed at the site.
Mexico’s pipeline gas imports from the United States rose by close to 12% year/year during the first eight months of 2021 despite a 6% y/y drop in February associated with Winter Storm Uri, researchers said.
“There’s going to be growing energy integration between the two countries,” Lloyd said. “It’s going to be good for the economy of both countries and it’s also going to be good for decarbonization.”
By the end of 2022, U.S. LNG export capacity should reach about 14 Bcf/d, from about 13 Bcf/d now. Most spot shipments will find their way to Europe.
“An open and modern country like ours requires a clear, transparent and reliable legal framework, as well as the application of technical criteria in the operation of the energy sector,” said CCE.
If the U.S. increases gas exports to Europe as a result of Russia’s invasion of Ukraine, “Mexico could face high gas prices and shortages,” said Velia Valdes, an associate director in Latin America Corporates. She spoke during a webinar Fitch organized on the Mexican energy sector.