Mexico's Natural Gas Dilemma: High Prices and Unresolved Reforms

Strategic Insights -

Mexico's dependency on importing natural gas from southern Texas continues, with the country paying a steep price for the energy product due to a lack of progress on reforms and domestic production. According to Dionisio Perez Jacome, president of the Energy Regulation Commission (CRE), Mexico's high natural gas prices are a result of inadequate decisions and stalled reforms. A potential solution lies in opening liquid natural gas (LNG) plants, which could import gas from countries like Indonesia, Russia, or Australia, potentially offering lower prices than the current market rate.

Key Takeaways:

  • Mexico's reliance on imported natural gas from southern Texas persists, despite concerns about high prices and lack of progress on domestic production and reforms.
  • High prices for natural gas are attributed to inadequate decisions and stalled reforms, as stated by Dionisio Perez Jacome, president of the Energy Regulation Commission (CRE).
  • Opening liquid natural gas (LNG) plants is identified as a potential solution to alleviate high prices, allowing for the importation of gas from non-US sources.
  • Four LNG projects are currently underway in Mexico, with three located in Baja California and one under construction in Altamira, Tamaulipas, forecasted to begin operations in mid-2006.
  • Importing LNG from countries like Indonesia, Russia, or Australia could offer lower prices compared to the current market rate, as suggested by Perez Jacome.

Statistics:

  • Mexico's reliance on imported natural gas from southern Texas continues, with no apparent resolution to the issue.
  • The current natural gas price in Mexico is high, with a potential solution offered through LNG imports from non-US sources.
  • Four LNG projects are currently underway in Mexico, with three in Baja California and one in Altamira, Tamaulipas.
  • The LNG project in Altamira, Tamaulipas, is expected to begin operations in mid-2006.
  • Importing LNG from countries like Indonesia, Russia, or Australia could potentially offer lower prices compared to the current market rate.

Sources:

  • Cronica/Corporate Mexico by Internet Securities, Inc. via COMTEX
  • Dionisio Perez Jacome, president of the Energy Regulation Commission (CRE)
  • Euromoney Institutional Investor Company
  • COMTEX (http://www.comtexnews.com)