Development of Mexico's natural gas market: A review of key policies from 1995 to 2018

Abstract

AbstractOver a span of two and a half decades, natural gas has come to be considered the top fuel source in Mexico's energy blend, and as such, a series of reforms and policies have been implemented. The liberalization of Mexico's natural gas market began in the mid‐1990s, with the goal to respond to prospective demand increases. Yet, the policies failed to upgrade transport capabilities, local sources of supply, and competition in core areas of the value chain—leading to inefficiencies like supply restrictions and infrastructure bottlenecks that emerged toward the end of the 2000s and early 2010s. Mexico's growing demand went hand in hand with a persistent decrease in domestic production throughout the 2010s, the country became dependent on imports—principally from the United States—, and natural gas has become the most pressing issue in terms of energy security. The 2013–2014 energy reforms entailed an additional generation of structural amendments that sought to address these adverse conditions and create a more efficient market. While progress was achieved by 2018, mostly on the institutional front, the country remained heavily dependent on US supply. This article focuses on relevant policy considerations that have shaped the development trajectory of Mexico's natural gas market from 1995 to 2018.