How much does the Mexican power market need US natural gas?

Compared to its peers, Mexico's power sector is highly dependent on natural gas. To be exact, 32% of the Mexican power sector depends on US-imported natural gas.

While the Trump administration's policies regarding Mexico have still not been confirmed, projects have been canceled and markets have already reacted to the uncertainty: consensus 2017 Mexico GDP was 3.1% in October 2016, and the forecast has now been nearly cut in half to 1.7%.

In recent years, Mexico's natural gas strategy has been focused on diversifying supply routes from the U.S. and securing access to sustainable low-cost gas to counteract the decline in indigenous production. In parallel, the power sector becomes even more dependent on natural gas. Many are now wondering whether the potential deterioration of the U.S./Mexico relationship could affect exports of U.S. natural gas to Mexico or whether it could trigger a change of gas and power policy from SENER (Mexico's energy department).

Source: Wood Mackenzie’s Global Gas H1 2017 Outlook, Wood Mackenzie’s LNG Service 2017

While nearly 60% of Mexico's natural gas demand is met by US supply, natural gas represents 55% of Mexico's power fuel mix. Of this, 32% of the Mexican power sector depends on US-imported natural gas. With more natural gas routes coming from the US and more fuel oil being retired, one would expect this number to grow.

What are the potential disruptive scenarios that could impact the supply of US natural gas to Mexico? Our Director of Americas Gas & Power Consulting Eleonor Kramarz presented three scenarios at the 3rd Mexico Gas Summit 2017 in San Antonio, Texas.

Complete the form on this page to access the presentation.

Wood Mackenzie recently completed a fully-integrated, bottom-up, detailed study evaluating Mexico's energy reforms and the impact on the power and natural gas markets, Boom or bust? Investing in Mexico gas and power. For more information on this study, contact:

Eleonor Kramarz
Director, Americas Gas & Power Consulting
E   Eleonor.Kramarz@woodmac.com
M   (832) 833-6024