Mexico’s next government must invest in natural gas storage and pipeline infrastructure in order to keep up with rising demand and meet energy transition goals, according to a new report by the Instituto Mexicano Para la Competitividad (IMCO) think tank.
Mexico is the world’s eighth largest natural gas market, with demand in excess of 8 Bcf/d. However, its natural gas storage capacity is a fraction of that of similar sized markets such as Germany or Italy, researchers said.
Despite the widespread global use of underground gas storage in depleted reservoirs, confined aquifers and salt caverns, Mexico only stores gas in its liquid form at the Altamira, Ensenada and Manzanillo liquefied natural gas import terminals, “which have limited capacity,” the IMCO team said in a report titled, Proposals for the Energy We Want 2024-2030.
The policy roadmap comes ahead of Mexico’s general election scheduled for June 2. Claudia Sheinbaum, a close ally of current President Andrés Manuel López Obrador, is heavily favored to win.
The IMCO authors cited that Mexico is only able to store about 2.4 days’ worth of gas consumption, while Germany – which consumes nearly the same amount of gas – boasts 89 days’ worth.
Despite multiple announcements of plans to develop storage capacity, little progress has been made, IMCO said.
Mexico’s Centro Nacional de Control del Gas Natural (Cenagas), operator of the Sistrangas pipeline grid, said last year it planned to launch a tender to develop storage capacity at the depleted Jaf natural gas field in Veracruz state.
More recently, state power company Comisión Federal de Electricidad (CFE) said it was seeking bids to develop underground storage capacity in South Texas. Mexico imports about 71% of its gas supply from the United States.
In addition to storage capacity, Mexico “requires more pipeline infrastructure to transport natural gas throughout the country,” researchers said. They cited long-delayed projects such as the Tuxpan-Tula pipeline, originally slated to enter service in 2017, but remains incomplete due to local opposition.
“In the foreseeable future, natural gas will remain a key fuel for industrial activities in Mexico, as well as a pillar of the electric generation mix,” researchers said. “Therefore, it is indispensable to guarantee its uninterrupted supply through more investments in pipelines and to implement a storage policy that allows the country to gradually approach the days of inventory of countries like Germany, Austria, Spain, France or Italy.”
The authors also stressed the importance of shoring up natural gas supply to southeastern Mexico through projects such as the Southeast Gateway offshore pipeline. CFE and Engie SA also reached an agreement last month to double the capacity of the Mayakán pipeline serving the Yucatán Peninsula.
In terms of gas supply, Mexico could increase its domestic production “without risking public resources” by resuming upstream bid rounds, which President Andrés Manuel López Obrador halted upon taking office in 2018, the IMCO team said.
IMCO suggested not replacing U.S. gas imports in the short-term, “but rather to gradually increase the production platform so that in the medium term, the country is in a better position to face climatic events without putting energy security at risk.”
