México’s energy picture is getting complicated. The country relies heavily on the US for natural gas – over 70%, according to Fitch Ratings. This dependence is a weakness that can be used against México.
The problem is that México can’t produce enough gas on its own. State-owned Pemex is responsible for 95% of the country’s gas production, but it hasn’t met its production targets. As a result, México has to import gas from the US.
This is a big deal because gas is used to generate over 60% of México’s electricity. With new energy projects in the works, like the Puerta al Sureste pipeline and power plants, the demand for gas will only increase.
Risks of relying on the US for energy
While the US is a reliable and affordable source of gas, there are risks. For one, gas contracts are priced in US dollars, which means that if the peso drops against the dollar, imports will become more expensive. This could lead to higher tariffs for consumers.
México is trying to reduce its dependence on the US by diversifying its energy sources. The Puerta al Sureste and Sur de Texas-Tuxpan pipelines, set to start operating in 2025, aim to improve connectivity and increase gas transport capacity.
Projects to mitigate the crisis
Other initiatives, like the Energía Costa Azul project in Baja California, aim to increase exports to Asia and other markets. However, these projects still rely on US gas to meet demand.
The challenge is clear: México needs to diversify its energy sources and strengthen its energy independence to avoid external crises, like those caused by Trump’s policies. Without a comprehensive plan to reduce dependence on the US, the country remains vulnerable.