Adam Williams

Throughout the administration of Mexican President Andrés Manuel López Obrador, a main grievance of energy sector members has centered on the inability to obtain proper permitting to continue or complete projects, such as natural gas pipelines or power plants, in a timely fashion. 

Mexico will need to attract more than $41 billion in investment to generate an estimated 37 GW of additional electricity capacity required to meet the increased energy demand anticipated by nearshoring, Abraham Zamora, President of the Mexican Energy Association (AME), said during a recent presentation in Monterrey. 

A glaring weak spot in the Mexico natural gas industry is the country’s lack of storage capacity. The issue is repeatedly discussed and considered a risk to national energy security, as Mexico has less than two days’ worth of storage capacity and is vulnerable to unforeseen weather or geopolitical events. 

Representatives from some of Mexico’s most important natural gas supply, transport and storage companies are optimistic that the national industry is poised to continue to grow.Mexico natural gas demand is set to expand 4.6% annually during the next decade, according to forecasts by national pipeline system operator Cenagas. 

Mexico’s incoming government should “consider the reactivation of electricity auctions that could drive new energy generation projects that the country needs to get ahead of the demand that will accompany nearshoring in Mexico, such as intense consumption during times of high temperatures and the need to accelerate the energy transition,” Andrea Villanueva Villarreal, a senior advisor and energy consultant, who worked as senior legal counsel at Mexico’s Comisión Federal de Electricidad (CFE) from 2019-2023, told NGI’s Mexico GPI.

Mexico’s Comisión Federal de Electricidad (CFE) is currently overseeing a portfolio of 60 electricity transmission and distribution projects to boost interconnectedness and power supply across the country as it prepares for a boom in demand as a result of nearshoring, according to Ricardo Octavio Mota Palomino, general director of power grid operator CENACE. 

If elected, Mexican presidential candidate Claudia Sheinbaum would seek to increase the country’s renewable electricity generation to as much as 50% of the national grid by the conclusion of her term in 2030, industry members familiar with the plans told NGI’s Mexico GPI.

“This year we are planning to invest more than 900 million pesos [$53 million] to expand our natural gas distribution network to be able to provide access to this transition fuel to more homes and businesses in cities and states where we have operations,” Felisa Ros, country manager of Engie Mexico, told NGI’s Mexico GPI. 

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 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.