Exploration & Production

Pipeline imports dampen Mexico’s upstream zeal

Improving pipeline connections with the United States will reduce Mexico’s dependence on LNG imports, but is unlikely to help upstream investment Improving pipeline connections with the United States will reduce Mexico’s dependence on LNG imports, but is unlikely to help upstream investment.
By Abhishek Kumar 18 June 2015 0 24515
Improving pipeline connections with the United States will reduce Mexico’s dependence on LNG imports, but is unlikely to help upstream investment. (Shell)

Mexico’s gas demand, driven by industry and the power sector, is rising fast – and so is its dependence on pipeline imports from the United States. The US has become a reliable supplier for Mexico and Mexico has become a useful customer for its northern neighbour.

This symbiotic relationship is not without problems, however. Although the Mexican government has started to make structural changes to the hydrocarbons sector to attract upstream interest, American imports may jeopardise medium-term investment in the country’s domestic production. This may also...