Interesting read ...before the game
Mexico is in the midst of an unprecedented upheaval of its energy sector…
After decades of government monopoly, the country has opened up its energy reserves to private investors, in an attempt to meet its rising power demands, while also advancing an ambitious goal of carbon reduction. Natural gas is at the forefront of both of these aims.
In August 2014, Mexican president Enrique Pena Nieto ratified a sweeping energy reform, which put an end to almost 80 years of government monopoly over the country’s energy market, while also mandating greater energy efficiency and lower emissions. Practically overnight, Mexico’s sizeable hydrocarbon and renewable energy reserves were opened up to private and foreign investors.
In fact, given their scale, Mexico’s energy reforms might more accurately be called a revolution.
Cleaner and leaner
Generating power using natural gas is cheaper, more efficient and less polluting than other fossil-fuel alternatives such as coal or oil, which has historically been the main fuel used in Mexico for power generation.
Mexico has estimated conventional natural gas reserves of around 3 trillion cubic meters, and by offering these up to outside developers, the government hopes to help meet the rising energy needs of its developing economy in an efficient, more environmentally friendly way.
Mexico’s energy reforms include a plan to increase its power generation capacity by 60 percent in fifteen years, from around 68,000 megawatts (where it stood in 2015), to around 109,000 megawatts in 2030. These extra 41,000 megawatts will be met almost entirely by a combination of natural gas combined cycle power plants, and renewable sources. (Alongside the energy reforms, Mexico is also pursuing its 2012 commitment to obtain 35 percent of its energy from non-fossil source by 2024).
The growth of natural gas for power generation will likely come at the expense of oil. In a 2016 report, the International Energy Agency (IEA) predicts that by 2040, the share of oil will fall from 51 percent to 42 percent, while that of natural gas will rise from 32 percent to 38 percent.
This displacement of dirtier oil power generation by natural gas, coupled with the spread of renewables, would allow Mexico to increase its energy output while simultaneously cutting carbon emissions. In the same report, the IEA forecast that by 2040, the joint adoption of natural gas and renewables could allow a 52 percent reduction in the carbon intensity of the Mexican power sector relative to 2014 levels, while also allowing electricity generation to increase by 70 percent.
With Mexico’s ambitious energy reforms in place, the tapping of its gas reserves is already underway. As Eniday reported, auction of Mexican offshore oil and gas parcels — largely located in the Gulf of Mexico — have attracted large investments, with 2016 seeing high bids of $156.4 million, and 2017 top bids of nearly $275 million.
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