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]

Fuel Subsidies Return, but With the Same Fiscal Risk as Always

The disruptions in the Strait of Hormuz have caused shocks in global energy markets, which have resulted in fuel shortages in several net-importing countries, which have had to implement fuel rationing measures at service stations. In Thailand, service stations recorded panic buying and applied limits on sales or bans on filling containers. In Indonesia, authorities confirmed sufficient diesel reserves after stopping their imports of this product, although they warned about pressure on subsidies that could affect other budgetary programs.

Countries such as Sri Lanka established mandatory gasoline rationing through a QR code system that limits weekly purchases to 15 liters per private vehicle. Pakistan, for its part, reduced the workweek to four days for public employees and cut fuel allocations for government agencies by 50 percent.

Mexico, however, maintains a degree of security in fuel supply thanks to its proximity to the United States market and to its local oil production, which allows stable flows of refined products through regional supply chains. However, the price has increased significantly in the last month; diesel went from an average price of $26.35 pesos on February 28 to $28.73 on March 27, registering an increase of more than $2.00 at the pump. Similarly, premium gasoline went from $25.70 to $27.77, while regular gasoline still remains, in general, at the voluntary cap of $23.99.

Considering the effects on the international price, the SHCP has had to publish new subsidies since March 13, in order to avoid a greater increase in prices, beginning with a 35.21% reduction in the IEPS on diesel, which increased to 70.28% for this week. This means that, in addition to the $2.00 increase in the average price of diesel, the Treasury stops collecting an additional $5.17 pesos per liter, plus its corresponding 16% VAT. The situation is more moderate for gasoline, where the subsidy for this week is $1.55 for regular and $0.45 for premium.

Although the mechanism seeks to contain the transfer of international increases to the final consumer through weekly tax subsidies, the current policy follows the pattern applied in 2022 and 2023, when IEPS subsidies generated a total revenue loss of up to 297 billion pesos.

The current adjustments to the IEPS respond to the same logic of balancing domestic prices and external volatility derived from the disruption in Hormuz; the underlying idea is not to pass on the full effect and generate inflation, as is beginning to be observed in freer markets such as the United States. However, it still represents a fiscal risk for the country’s public finances, which no longer have as many export surpluses as in previous years.

The evolution of maritime flows will determine the duration of these measures in Mexico and in the rest of the affected countries. However, an easy end is not in sight soon, so it is possible that we will first see additional subsidies for diesel and gasoline.

This article was originally published by La Prensa OEM.
Date: April 6, 2026
Link: https://oem.com.mx/la-prensa/analisis/opinion-por-paul-alejandro-sanchez-campos-regresan-los-estimulos-a-los-combustibles-pero-con-el-riesgo-fiscal-de-siem-29348527 [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]