Mexican president Claudia Sheinbaum Pardo gave a speech in early February focused on the country’s plans for expanding the National Electric System in 2025–2030. The speech and accompanying documents laid out 10 combined cycle plants to come online between 2025–2027, totaling 6.7 GW of incremental capacity. Another five combined cycle plants were mentioned as under consideration, which total an additional 3.4 GW of capacity, and would come online in 2028–2029. The combined 15 plants would equate to ~810 MMcf/d in incremental demand.
In March, Mexico’s Federal Electricity Commission (CFE) announced that four of the five projects under consideration were approved to move forward with development. Along with the approval came an update to capacity and changes to the list of plants under consideration. One of the plants included in the initial proposal was a 934-MW plant in Guadalajara that required a feasibility study and was left off the updated CFE list. Instead, a 240-MW plant in Los Cabos was proposed, which will require additional pipeline buildout. The updated list of projects under consideration equates to 2.8 GW of capacity, or 239 MMcf/d in incremental gas demand.
The demand growth associated with these 15 plants is just the latest addition to a long-standing trend of natural gas’ growing prominence within Mexico’s energy stack. In 2010, annual average gas demand for Mexico was 6.3 Bcf/d, and by September 2024, demand had grown by 3.1 Bcf/d to reach 9.3 Bcf/d. A small portion of demand in late 2024 can be attributed to Altamira FLNG I, but the lion’s share is for domestic consumption.
Looking back to 2011, Mexico’s total natural gas production peaked at 6.9 Bcf/d, but by January 2025, production had declined to 4.4 Bcf/d. Production decreased in 2024 by an average of 400 MMcf/d vs. 2023. Included in President Sheinbaum’s February announcement was a goal for the state-owned oil company, Pemex, to increase its gas production from 3.5 Bcf/d in December 2024 to 5 Bcf/d over the next six years. However, without this increase, Mexico’s production will continue to fall well short of demand.
Due to this ongoing trend of falling gas production within Mexico, it is likely that more gas will have to be imported from the U.S. to meet the incremental growth from the proposed power plants. As of December 2024, U.S. gas exports to Mexico averaged 6.4 Bcf/d. Most of the gas exported from South and West Texas is Permian gas, which saw 2 Bcf/d of production growth YoY in 2024.
Combined, the 10 plants expected to come online in 2025–2027 will add approximately 571 MMcf/d of incremental demand. If the additional five approved projects that are set to start up in 2028–2029 make FID, this will add another 239 MMcf/d of demand. Again, it is likely this increase in demand will require more gas from the U.S., but if Pemex successfully increases production by 2 Bcf/d over the next five years, then incremental domestic production could cover the growth in gas demand.
For more insight into U.S. exports of natural gas and other U.S./Mexico energy dynamics, be sure to check out our comprehensive suite of energy market tools and analysis.
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