In 10 months, on Oct. 1, 2024, Mexico’s new president will take office, and the six-year term of Andrés Manuel López Obrador will end. Members of the Mexican energy industry told NGI’s Mexico GPI they are hopeful for a change in energy policies that have at times stalled and frustrated the sector during the past five years.
The government of López Obrador has had a complicated relationship with private and foreign investors. They have limited access to necessary electricity and development permits, and halted exploration and production of shale gas.
Industry experts such as Rosanety Barrios, who in December was announced as a member of the energy team of presidential candidate Xóchitl Gálvez of the Partido Acción Nacional (PAN), told NGI’s Mexico GPI that short-term goals for the sector should focus on legal certainty and the reduction of methane emissions.
Barrios, who is an independent analyst, worked previously at the Mexican Energy Ministry (Sener) and Comisión Reguladora de Energía (CRE).
“I have a big concern that the deterioration of legal certainty is complicating investments in the Mexican energy sector,” she said. “I’m also very concerned with the lack of regulation regarding methane emissions” and the social opposition to the development of infrastructure required to reduce flaring and venting, she said.
In the longer term, looking ahead to the 2024-2030 presidential term, Barrios reiterated that the natural gas industry must fortify storage and transport infrastructure.
“Mexico should conduct a realistic study about the country’s natural gas demand that will allow the country to identify if the existing infrastructure is or isn’t sufficient to attend to national demand,” she said. “We should also seek to develop large-scale natural gas storage.”
Santiago Villarreal, who specializes in advisory services in regulatory and administrative matters focused in the U.S. and Mexico energy sector, agrees with Barrios, adding that he thinks the future administration in Mexico should “incentivize natural gas transport infrastructure.”
Villarreal, who has worked with Shell plc, TotalEnergies SE and Sener, said Mexico should also “review and supervise the natural gas sales and commercialization market, principally regarding open access to distribution regions.
“Mexico needs to promote transparency in marketing and natural gas prices,” Villarreal said. He added that he thinks the country also should “liberate the import of natural gas and eliminate authorization requisites at border crossing points.”
New Oil & Gas Rounds
At the beginning of his administration, López Obrador announced that he would not allow for shale gas exploration and development during his six-year term. This decision effectively paralyzed the country’s plans to authorize foreign and local companies to develop Mexico's vast shale gas reserves.
López Obrador also halted all new oil and gas rounds.
Villarreal said, in his opinion, Mexico should prioritize the reactivation of oil and gas licensing rounds, which he claims would “promote local production” in the country that slowed after López Obrador took office.
Miriam Grunstein, a senior partner at Brilliant Energy Consulting who has a distinguished career in the Mexican energy industry, agrees with Villarreal that the country’s energy industry should prioritize new oil and gas bidding rounds to foment growth in the sector during the upcoming administration.
“The energy reform of 2013 put Mexico in position to really develop national natural gas and shale resources, though the current administration shifted the focus away from those plans to prioritize gasolines and the [Dos Bocas] refinery,” Grunstein told NGI’s Mexico GPI. “My conclusion is that Mexico should evaluate the facts and information available regarding natural gas and design plans to improve production in Mexico, as well as what infrastructure is needed to move natural gas within the national territory.”
She added that, if Mexico is to capitalize on the opportunity presented by the current nearshoring boom, increased natural gas production — including shale — will be required, as well as improved infrastructure.
“There needs to be more long-term natural gas development plans put in place for the country that go beyond plans for just six-year presidential terms,” Grunstein said. “If we have longer term plans in place and direction for the natural gas sector, hopefully it can be assured that national production is available to meet increased demand, which would allow Mexico to become less reliant on U.S. imports.”
