FEAT U RES
Latin America gas outlook To coincide with the Latin America and Caribbean Gas Conference being organised by EnergyNet, IGU and ARPEL in Mexico City, October 9-11, this Wood Mackenzie report assesses how gas markets in Mexico and the Caribbean will develop. By Rodrigo Rosas Natural gas supply and demand
investment and introduced new
as residential heating needs are limited
balances are changing across Latin
technical expertise to build Mexico’s
in Mexico’s climate. Residential demand
America with unique drivers impacting
energy industry.
is concentrated in a few cities, which
each market. Focusing on Mexico and
Mexico market dynamics keep
account for 71% of total residential-
the Caribbean, we discuss both the
evolving. We expect that gas demand
current and long-term prospects for
will show a steady 2% compound
demand and supply as well as the
annual growth rate (CAGR) from 2018
economic growth stimulates industrial
underlying factors driving these new
to 2040 (see Figure 1). This means
gas demand more than in other OECD
market dynamics.
that, by 2040 and excluding gas used
markets. In this line, the industrial
by Pemex in petroleum exploration
sector has replaced other fuels, such as
Mexico
and production, Mexican gas demand
fuel oil and diesel, boosting gas
An unprecedented reform in 2013
will be above 9 bcf/d (255 mcm/d),
demand. The national power utility –
ended 75 years of state monopoly
driven mostly by the power and
Comisión Federal de Electricidad (CFE)
across the power, oil and gas sectors,
industrial sectors.
– has been in charge of developing
allowing private companies to parti
The residential-commercial sector
commercial consumption. As a middle-income country,
new take-away capacity out of the
cipate in all aspects of the value chain.
has the highest percentage growth,
prolific Permian Basin and South Texas.
This has boosted private capital
albeit from a very small starting point,
The development of these new corri dors results in easier access to lowercost natural gas for the industrial
bcfd
Mexico demand 2015-2040
sector as it can reach new areas of the country.
12
While demand in the residential and
10
industrial sectors shows solid growth,
8
the power sector will remain the key market mover over both the short- and
6
long-term. Gas-for-power seasonality
4
increases over time as gas-fired power
2
replaces today’s seasonal fuel oil generation due to dispatch economics
0 Jan-15
Jan-20 ResCom
Jan-25
Jan-30
Jan-35
Industrial
Petro
Power
Source: Wood Mackenzie
Jan-40
and strategic efforts to reduce oil generation. CFE’s programme to shift
Figure 1.
away from fuel oil generation has been underway for several years as seven
38 Latin America gas outlook
