Experts from Mexico’s energy industry told NGI’s Mexico GPI that they feel optimistic 2024 will bring positive developments to the natural gas sector following several difficult years of uncertainty and unforeseen policy changes.
In conversations and exchanges with nine Mexico energy industry experts and leaders in December, the majority expressed cautious or moderate optimism for the new year, while all say they are hopeful that a new president in 2024 will introduce policy shifts to fortify the natural gas sector and prepare the country to welcome the increased demand expected as a result of nearshoring.
“I feel more optimistic given that in the relocation of companies to Mexico, access to natural gas is one of the key elements when making their decisions,” said Guillermo García Alcocer, who was the director of Mexico’s Comisión Reguladora de Energía (CRE) from 2016-2019 and spent more than nine years at the Energy Ministry (Sener). “There is a shared recognition among distinct political forces that nearshoring is fundamental to Mexico’s development and, without gas or electricity, this won’t be a reality.”
Sandra Jahnsen, CEO of Jahnsen Business Consulting & Corporate and recently voted one of the most influential people in the Mexican energy sector, said she too feels “moderate optimism” for the year ahead, while recognizing that the dependence on U.S. natural gas imports and insufficient infrastructure present challenges.
“I see a big window of opportunity in betting on national production and the diversification of energy sources,” Jahnsen said. “I feel moderate optimism because the road to progress isn’t simple…and with a more defined strategy for natural gas that includes better planning, organization, leadership, control and flexibility, there is an opportunity for positive development and growth in the Mexican sector.”
Alain Duthoy, who leads the legal practice for Lexoil Consultores and specializes in energy law and providing legal services to industry clients, said he shares an optimistic forecast for Mexico’s natural gas industry in 2024.
“Due to the increasing electricity demand in the country, I feel optimistic for the continued development of the natural gas sector in Mexico,” Duthoy said. “The government has announced and started construction on electricity generation plants that require natural gas, which will bring with it more demand. Additionally, there is a growing trend for industrial parks to generate on-site electricity, which is done with natural gas, and for that reason there could be growth in more distribution infrastructure.”
Diego Rivera, research associate at Columbia University’s Center on Global Energy Policy (CGEP), said that he feels optimistic about the global natural gas industry for 2024 and that the international LNG markets are more stable than in previous years. Regarding the Mexican sector, he said he is less optimistic and doesn’t foresee much movement in the industry until after the June presidential elections.
“I am less optimistic about the Mexican industry because I think that during the first half of the year — as we’ve seen with every six-year administration — the electoral environment will make it difficult to make decisions that impact public policy or generate relevant investment, no matter what the election results are,” Rivera said. “I think it will be only at the beginning of the second half of the year when we begin to see the first steps and impact of the new administration.”
Erick Sánchez, vice president for Business Development in Mexico and Central America at Rystad Energy, said that, regardless of feeling optimistic or pessimistic about the upcoming year, the one certainty for the national energy and natural gas sector will be an increased demand for electricity.
“Energy demand in Mexico finds itself in a state of constant incremental growth that will require volumes of investment in the development of necessary infrastructure,” he said.
Sánchez added that the rigid policies and industry controls established by the current administration will “require an obligatory change.”
“To comply with the growing energy demand needs, the opening of the sector will need to be reevaluated to allow for mixed participation in the public and private sector to generate necessary investments,” he said.
Teresa Gallegos, independent legal and regulatory senior advisor who has worked at Sener, the Comisión Nacional de Hidrocarburos (CNH), the Comisión Federal de Electricidad (CFE) and Petróleos Mexicanos (Pemex), said that, beyond 2024, the new government must consider further development of the natural gas industry as a top priority to assure new investment opportunities and energy security for future generations of Mexicans.
“Currently there are projects underway where foreign companies are developing natural gas infrastructure to import natural gas to Mexico from the U.S. at the most competitive prices in the market so that they can be exported to Asia and Europe,” she said. “These projects represent multimillion dollar investments that will generate economic opportunities for the country, however, there aren’t clear rules or transparency about how these projects will contribute to the energy security of Mexico. In my opinion, the creation of such rules and improved transparency must be a priority.”
