From Forbes

Mexico is a very fast growing natural gas market, and imports from the U.S. could reach 8-10% of current U.S. production much faster than most realize. The 2013 Energy Reforms are a historic opportunity for state-owned Pemex to increase oil and gas production and lift the economy. Pemex has been forced to unfairly provided the government with 35-40% of its budget. Too lengthy of a subject to detail here (check here, here, here), but the reforms and the Implementation Plan should install a fully competitive Mexican natural gas market around 2018.

Like the upstream oil and gas sector, Mexico’s midstream has been plagued by underinvestment for a very long time. Today, despite having well over four times more people, Mexico has about 1/10 of the pipeline system that Texas has. Much of Mexico’s pipeline and generation sectors have been centered in the eastern/northern parts of the country, and the infrastructure buildout is meant to bolster the southern/western areas that have been underdeveloped and isolated.

And with far less costly regulations and environmental opposition, “TransCanada finds warmer welcome in Mexico for pipeline business.” Mexico’s natural gas midstream sector should expand in length by over 90% in the next three years to 13-15,000 miles of gas pipelines.

 Limitations for both electricity and natural gas have been two key factors constraining output growth in Mexico. The McKinsey Global Institute reports that “despite its energy endowments, Mexico lacks a cost-efficient and reliable power supply, which limits the productivity of even the best-run enterprises.”  Mexico’s transmission and distribution losses have been a crucial weakness and run about 20% of total generation, twice the OECD average.

Poor investment in infrastructure has led gas pipelines to operate near maximum capacity, so even smaller problems can quickly get magnified. Augmented by rising demand, limited gas transport capacity have led to severe gas shortages. Recently in just six months time, “Mexican business leaders say they lost $2.25 billion in revenue.”

This simply isn’t acceptable for Mexico, now seen as the emerging Latin American giant as Brazil spirals deeper into recession. And there’s no excuse for my adopted country: Mexico is a resource rich nation and has access to cheap natural gas from the U.S. at a price that has been about a third of the average price in Western Europe.

These infrastructure shortages have forced Mexico to turn to more expensive LNG from Qatar, Peru, Nigeria, and others. Since 2010, Mexico’s gas demand has risen 25% since 2010 to nearly 3 Tcf and could rise another 50% by 2025.

At 20% of GDP, manufacturing is high in Mexico and will headline the boom in natural gas demand. The industrial sector accounts for about 60% of Mexico’s electricity sales. Mexico has rising domestic needs, proximity to the U.S., and at a 44 count, more free trade agreements than any other nation. Of note, electricity and natural gas are about 70% of the total energy used in the industry sector and about 90% of the energy used in the automobile industry.

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