NYMEX sensitivity case, developed from the Mexico gas, power and renewables long-term outlook H2 2020

Wood Mackenzie’s gas prices forecast – used as a primary input in our Base Case - shows Henry Hub prices to remain close to US$2.99/mmbtu until 2030. However, downgrades to our associated supply will become more material in the 2030s, as WTI oil prices are revised down by US$3-4/bbl starting in the late 2020s. As the gas market needs to call on higher cost dry gas supply to offset the associated supply downgrade, we expect Henry Hub to increase towards US$4/mmbtu by 2040. In contrast, NYMEX’s future gas prices consider a flatter and steadier trend, ranging between US$2.0/mmbtu and US$2.5/mmbtu in the long term. This sensitivity case provides the results of our Mexico’s power sector long-term outlook using NYMEX’s forecasted gas prices as a principal input. The more considerable variations are observed in energy prices due to the country’s energy mix dependence on gas-based generation.