Despite ongoing efforts by Pemex to boost production of gasoline, diesel and jet fuel, the Mexican market still depends on imports from the U.S. for just over half of its refined product needs. And moving nearly 700 Mb/d of transportation fuels to population centers south of the border is no easy task.
U.S. exports of gasoline, diesel and jet fuel to Mexico have been mostly rising the past 15 years. Over that same period, the Mexican government’s policy on the import-related roles of state-owned Pemex and private companies has zigged and zagged, slowing efforts to develop new midstream infrastructure.
Mexico’s still-rising demand for U.S.-sourced natural gas — and new pipelines to deliver it — has been driven by the buildout of new power plants and, more recently, by planned LNG exports. Today, we discuss more private-sector midstreamers and the new gas demand that may bring them new opportunities.
Mexico’s process for planning new gas pipelines is very top-down, with state-owned Cenagas and CFE playing key roles. But the buildout of pipelines there has been largely accomplished by private-sector companies that are now planning another round of projects that will spur more gas exports from the U.S.
In Mexico, state-owned players like Cenagas and CFE continue to play central roles in planning and underpinning the development of natural gas pipelines. At the same time, however, Mexico has leveraged the participation of a handful of private-sector companies that have built a significant share of the newer pipelines there.
Dangote eyes a massive expansion but still struggles to reach capacity. Dos Bocas faces steeper hurdles. New refineries worldwide keep hitting the wall as bold plans collide with tough execution.
Ten years ago, U.S. exports of natural gas in the form of LNG were a footnote in the market. But that all changed in 2016. In February of that year, the first shipment of LNG from the Lower 48 states set sail when the vessel Asia Vision departed from Cheniere Energy's Sabine Pass export terminal in Louisiana. This was the culmination of a remarkable turnaround, not only at Sabine Pass, but for the U.S. natural gas market as a whole. Eight years earlier, Sabine Pass had been completed as an import terminal, as it was projected that the U.S. would face significant shortages of natural gas supplies. Shale turned that business model on its head.
The Trump administration’s approach to economic policy — including tariff threats to longtime allies backed by sometimes shifting policy goals — might be a sound tactical move in the long run by keeping negotiators on edge and extracting better deals. But that approach has also heightened the sense of uncertainty about where things are headed, affecting investment and long-term planning. In today’s RBN blog, we discuss how economic policy uncertainty has increased in the past few months and how it’s impacting activity in the energy sector.
Mexico’s LNG sector has seen notable advancements in the past year, including new export project announcements and strategic investments. But many of the proposed LNG projects require extensive pipeline buildouts — no easy task south of the border and perhaps the biggest impediment most of the export projects face. In today’s RBN blog, we’ll look at where things stand with Mexico’s LNG sector and the export projects under development.
A significant shift is underway within Mexico’s energy landscape, reflected by the development of large-scale oil and gas infrastructure projects in the country, particularly the Southeast Gateway and Sierra Madre gas pipelines that would move U.S.-sourced natural gas across Mexico. These projects — the first an undersea pipe in the Gulf of Mexico and the second a pipe across the country’s northern tier — would enhance Mexico’s gas transport capacity while supporting power generation and industrial development. Mexico, which is already heavily reliant on imports of U.S. gas, is forecast to see gas demand rise in the coming years as domestic production drops. In today’s RBN blog, we look at those two pipelines, their challenges, and how the potential for U.S. tariffs on Mexican imports might complicate the future of both projects.
