As Mexico prepares for its upcoming presidential election, the country finds itself confronted with a series of pressing energy challenges. These include dwindling oil and gas production, a necessity to ramp up exploration efforts, a heavy reliance on gasoline imports, strained power supply, and mounting public pressure to transition towards renewable energy sources. A recent report from Wood Mackenzie highlights these issues against the backdrop of increasing domestic demand projected throughout the decade.
Adrian Lara, principal analyst for Wood Mackenzie, emphasized the urgency of addressing these challenges, regardless of the election outcome. He noted the imperative for the new government to reevaluate the role and terms for boosting private investment in the energy sector. Lara underscored the limitations facing Mexico’s state-owned hydrocarbon producer, Pemex, in shouldering the risk and funding necessary investments for industry infrastructure growth.
Wood Mackenzie’s report forecasts a 2% growth in Mexico’s oil and gas demand over the next decade, yet production is expected to continue declining. This poses significant hurdles for meeting domestic refining and natural gas demands, leading to continued reliance on gas imports. Lara warned of a potential steeper production decline post-2030 without substantial policy changes regarding hydrocarbon bidding rounds and exploration block awards.
Highlighting Mexico’s untapped energy potential, Wood Mackenzie revealed that around 60% of prospective resources in the country remain unawarded. Lara emphasized the need for revising fiscal terms to attract investment and explore additional resources, crucial for sustaining current oil output levels. However, international interest in Mexico’s energy sector hinges on policy certainty and attractive fiscal terms.
The report also addressed Mexico’s lag in renewable energy transition, noting the absence of a clear net zero emissions goal. Despite pledging a 35% emissions reduction by 2030 at the Paris climate conference in 2015, Mexico has yet to outline a definitive roadmap. Lara stressed the necessity for significant financing support, both public and private, to accelerate renewable energy development and enhance energy efficiency to achieve emission reduction targets.
As Mexico navigates these complex energy challenges, the upcoming presidential election holds significant implications for the country’s energy future and its ability to meet growing demand while transitioning towards sustainability.