Hart Energy
Mexico's Growing Power-Generation Market

Friday, August 08, 2014

Based largely on new power generation capacity, Mexico’s demand for natural gas is expected to increase by 3.2 billion cubic feet per day (Bcf/d), according to analysis provided during a recent Platts-Bentek Energy Summer Webinar Series.

U.S. exports, mostly from the Eagle Ford, Anadarko and Permian basins, will supply about 3.5 Bcf/d to the nation through new export capacity, said Jim Kahler, a senior analyst at Bentek Energy.

Ross Wyeno, also an analyst at Bentek, added that power demand in Mexico is expected to grow from 2.5 Bcf/d today to 6 Bcf/d in 2015.

As Kahler explained, energy reforms working through the Mexican government are expected to open the U.S.-Mexico relationship. But Mexico still has work to do for its grid to meet the needs of its people. Pemex, the national oil company, has heavily subsidized the Mexican government. As its production has slowed, so has revenue to the treasury. Depending on the year, between 35% and 40% of Mexico’s revenue comes from Pemex.

“Fewer exports mean less revenue,” Kahler said. “And these reforms are more than just deregulation.”

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