Natural Gas in Mexico: Urgent Decisions

The natural gas strategy presented on April 8 by the federal government takes up a known diagnosis, but now with a greater sense of urgency. Mexico arrives at this discussion with a relevant resource base, but with clear signs of depletion in its proven reserves and a growing dependence on foreign supply.

According to the latest official reserves report as of January 1, 2024, the country had a natural gas reserve-to-production ratio of 6.7 years in the proven reserves category. This indicator, which measures how many years production could be sustained at the current rate, already reflected a limited position. An additional element, which is not minor, must be added to this. Since then, equivalent updates have not been published, so it is reasonable to consider that this figure may have decreased. If production has been maintained and the incorporation of new reserves has not been sufficient, the horizon could today be closer to four or five years.

This deterioration is not an isolated phenomenon. National natural gas production has shown a downward trend over the last decade, while demand has grown driven by the electricity sector and industry. The result is a greater dependence on imports, mainly from the United States. Today, close to three quarters of national consumption comes from abroad, with a significant concentration in gas produced in Texas. This configuration has made it possible to supply the country at relatively low costs, which has been good news for the CFE and consumers, but has also increased exposure to external conditions.

The discussion about how to reverse this trend necessarily goes through the nature of the available resources. A relevant part of Mexico’s gas potential is found in unconventional formations, particularly in shale. Its development requires techniques such as hydraulic fracturing. This is not a minor technical decision, but rather a definition of energy policy. Without the development of these resources, the margin for increasing national production is limited.

At this point the environmental and social debate emerges. Hydraulic fracturing has been questioned because of its possible impacts on water use, waste management, and the integrity of aquifers. International experience shows that these risks can be managed with regulation, technology, and oversight, but it also shows that social acceptance is a determining factor. In Mexico, this debate has been particularly sensitive and has conditioned policy decisions in recent years. Added to this is a context of institutional distrust. Recent episodes, such as the spill in the Gulf of Mexico, have made evident the difficulty of clearly identifying the causes, determining responsibilities and, where appropriate, imposing sanctions. This type of precedent directly affects public perception regarding the capacity of the State and of operators to manage environmental risks in more complex projects.

The case of Texas offers a useful reference. The development of unconventional gas was not the result of a single centralized policy, but of an ecosystem with multiple operators, something like wildcatters, who took risks, innovated, and scaled up production rapidly. This dynamism made it possible to transform the regional energy structure in little more than a decade. Replicating that process is not automatic, but it does show the importance of the diversity of actors and of the proper incentives.

This is where the real discussion comes in. Pemex concentrates most of the country’s reserves and will continue to be a central actor. However, its cost structure, its operational burden, and its financial restrictions limit its capacity to rapidly develop complex resources. This does not imply that the projects are not valuable for the country. There may be developments that are not profitable under strictly corporate criteria, but that are profitable from a national energy and economic perspective.

The critical point is how the sector is organized to close that gap. The pace at which Mexico can incorporate new reserves and increase its production will depend on the fiscal arrangement, investment schemes, and the degree of participation of other operators. Opening up to additional capital and capabilities is not an ideological issue in itself, but rather a variable that directly affects development times.

The strategy presented opens that conversation at a moment when the room for maneuver is narrowing. The challenge is not only to produce more gas, but to do so under conditions that balance energy security, economic viability, and social acceptance. The result will depend less on the diagnosis, which is known, and more on the decisions that are made from now on.

This article was originally published by La Prensa OEM.
Date: April 10, 2026
Link: https://oem.com.mx/la-prensa/analisis/opinion-por-paul-alejandro-sanchez-campos-gas-natural-en-mexico-decisiones-urgentes-29415128 [Online]

The Eyes on the Global Natural Gas Market

The effect that conflicts in the Middle East have on the oil and natural gas markets is well known; what is particularly relevant on this occasion is where the effect is taking place. While oil is recording contained increases of less than 10%, liquefied natural gas (LNG) is facing a significant shock, mainly following QatarEnergy’s announcement that it is suspending its LNG production after attacks on facilities in Ras Laffan and Mesaieed, and today it extended the measure to products such as urea, polymers, and methanol. Additionally, the Strait of Hormuz, a critical route, has seen its traffic fall drastically due to Iranian threats, leaving hundreds of vessels stranded. This asymmetry highlights vulnerabilities in the global LNG supply chain. The measure is not minor; QatarEnergy represents close to 20% of the world’s LNG supply, almost all of it passing through Hormuz and heading to Asia.

In recent years, natural gas has acquired greater relevance as a transition fuel since it is more efficient and has lower emissions than coal, which has driven investments to promote electricity generation in Asia using natural gas mainly obtained through LNG vessels. The global LNG market has grown to such an extent that even the United States has strengthened its position with LNG exports reaching records in 2025 and surpassing shipments by pipeline to Mexico and Canada. In this way, LNG has consolidated itself as the main vector of international trade, allowing flexible shipments.

The war disproportionately affects LNG because it has a fairly complex logistics chain that requires specialized terminals, there are limited vessels and they are usually tied to long-term contracts, so there is a lack of quick alternatives. Likewise, there are no massive floating inventories or routes equivalent to those of oil. This generates immediate impacts, producing increases in European benchmark prices of almost 50% and in Asia of 25%.

Japan, South Korea, China, and India receive most of Qatari LNG and face risks to up to 30% of their usual supply, with intense competition for alternatives. Europe, limited by sanctions on Russia and the situation in Ukraine, is threatened by an increase in electricity costs and effects on industry. Russia could increase shipments to China through pipelines, but with restricted capacity. The United States, as the largest exporter, can redirect volumes to allies, consolidating influence although with logistical limits and domestic prices on the rise.

What stands out from this crisis is that LNG, despite its growing demand and its position as that fuel for the energy transition, is also exposed to geopolitical bottlenecks that, for the moment, oil has mitigated better given its inventories and diversification of production. Nevertheless, if the conflict continues, a reordering is likely, which would imply bringing coal-fired power plants back into operation, facing high energy costs in Asia and Europe, and a call to strengthen resilience on critical routes. Energy logistics continues to be a decisive factor in global stability and the Middle East a key actor in energy markets. In the case of Mexico, for now, we benefit from the proximity to production in the United States, so a shortage is not foreseen, although, without setting aside, that a possible increase in benchmark prices could hit the country’s tariff structure, whose electricity generation matrix depends on natural gas for more than 60%.

This article was originally published by La Prensa OEM.
Date: March 21, 2026
Link: https://oem.com.mx/la-prensa/analisis/opinion-por-paul-alejandro-sanchez-campos-los-ojos-en-el-mercado-global-de-gas-natural-29260064 [Online]

OPEC+ Cuts Again

This Sunday the news was spread that OPEC+ is planning a new voluntary cut led by Saudi Arabia that by itself would reduce 500,000 barrels per day. The members of OPEC and their allies could reduce between 1.1 and 1.6 million barrels per day of crude in the world market, which depends on Russia contributing another 500,000 barrels per day to the reduction. In any case, the cut would enter into force starting in May and would extend throughout all that remains of 2023.

Of course this is not a coincidence. In the midst of the financial chaos caused by the inflationary escalation, the continuous rise of the reference rate and the blow to banking institutions, it is not the best moment for energy prices to come back on the offensive. But it is clear that the surprise cut is directed at the United States for a couple of reasons particularly.

“It is clear that the surprise cut is directed at the United States.”

On the one hand, in October of last year the United States promised Saudi Arabia that it would not let oil prices collapse and that, once prices touched $75 dollars per barrel in the Brent reference, the government of the United States would begin to fill its strategic reserve to keep the price stable.

However, when the price of Brent fell below the mark in mid-March, the Biden government showed little interest in beginning the purchase of oil to refill the strategic reserve and even declared that perhaps, toward the end of 2023, they could begin with the purchase to observe the behavior of global markets derived from the recent financial shocks.

On the other hand, just last week the United States Energy Information Agency published that in 2022 the United States broke a record of crude exports, reaching 3.6 million barrels per day, which represented an increase of 22% compared with 2021.

Faced with greater production of American oil in the world and with prices falling in comparison with the previous year, it seemed like a good moment to begin filling the strategic reserve of the United States. This would allow reducing the circulating crude and stopping the fall of international prices.

These two events could have had political implications, or that is what is rumored in the circles that follow the issue. That Biden did not quickly fulfill his word to maintain the international price of oil contributes to the deterioration of relations between the two nations.

For now, the price of oil in the main references has risen around five dollars per barrel after the announcement. It is too soon to know whether this price will be maintained in the future or how the United States will respond or, even, whether the countries, including Russia, comply with the voluntary reduction, but what is a fact is that this occurs at a complicated moment due to global inflationary pressure.

This article was originally published by Energía a Debate.
Date: April 3, 2023
Link: https://energiaadebate.com/la-opep-recorta-de-nuevo/ [Online]