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Mexico 'wasting' potential of northeastern region with current energy policy: industry

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Mexico 'wasting' potential of northeastern region with current energy policy: industry


Region comprises of Coahuila, Nuevo Leon, Tamaulipas states

Could generate 30% of Mexico's power needs with renewables

Non-conventional natural gas resources also promising

  • Author
  • Sheky Espejo
  • Editor
  • Shashwat Pradhan
  • Commodity
  • Electric Power Natural Gas

Mexico City — Mexico is not fully utilizing the potential of its northeastern region in both natural gas production and power generation with its current energy policy, which limits the involvement of private players, participants said on May 17 during a virtual panel.

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The northeast region, comprising of the states of Coahuila, Nuevo Leon and Tamaulipas, has the potential to generate 30% of the country's power needs with solar and wind energy, said Rogelio Montemayor Seguy, president of the energy cluster of the state of Coahuila, which is home to many local and foreign companies.

"That enormous potential is being wasted with the current restrictions to private generation," Montemayor Seguy said during a virtual panel organized by IMEF, one of Mexico's largest financial non-profit organizations.

The Mexican government under President Andres Manuel Lopez Obrador has introduced a series of regulations and decrees that have helped state oil company Pemex and the county's utility CFE. The moves have curbed the participation of private companies across the energy sector, from fuel importers to power generators. The government's actions are currently being fought in courts.

The northeast region also has the potential to generate the natural gas the country needs to produce most of its electricity and reduce the dependency on imported gas from the US, said Cesar Cardenas, president of the energy cluster of the state of Nuevo Leon.

"The supply of natural gas is paramount for the country's security. That was highlighted with the shortage of gas generated by the cold weather recently registered in Texas," Cardenas said, highlighting that changes in policy are needed in Mexico, as most of those resources are in non-conventional deposits currently not being pursued.

"The only way of obtaining those resources is by using fracking and that's why public-private cooperation is necessary," Cardenas said.

The Mexican government has decided to cancel all investments in deep waters and non-conventional deposits to focus on shallow waters, where Pemex has traditionally had a good record and where the government considers it can more quickly get the resources to boost production to roughly 2 million b/d by the end of 2021 from less than 1.7 million b/d currently.

Montemayor Seguy agreed on the potential of non-conventional natural gas and regretted the cancelation by the current government of the international rounds that had opened the upstream sector in Mexico for the first time under the past administration.

If an average of 30 successful rounds were organized in the country every year for non-conventional natural gas, the region could generate enough profits to fund all the social programs of the government, Montemayor Seguy said.

"This region could be the economic locomotive that moves this country forward," Montemayor said, adding that the government could consider the potential of the border region as an exporter of electricity to the US.

Jorge Radi, head of Mexico's commercial office at Enel, mentioned that the country is strategic for the company considering Mexico could host roughly 40 GW in new clean energy generation projects, many of which could be located in Coahuila, Nuevo Leon or Tamaulipas.

"The key to Mexico's success is in the northeast," Radi said.