Relationship between Mexico & USA in Shale Gas

Mexico vs USA

Despite current political rhetoric from certain parties, Mexico and the USA continue to share a close, mutually beneficial relationship, especially in regards to energy. Mexico is the USA’s third largest trade partner (Canada and China are the top two), with oil and gas accounting for $65bn in trade in 2012. For Texas, the Mexican market is particularly important accounting for more than $100bn in exports, three times the next largest export market.

Typically crude oil is exported to the USA, with refined product then re-imported into Mexico due to Mexico’s lack of refinery capacity. Natural gas is also being imported in increasing volumes into Mexico, largely to power the gas powered turbines Mexico uses to generate electricity (approximately 35% of Mexican energy production is via gas). In some cases, this interdependency is further strengthened by the sale of electricity between Mexico and the USA via various electricity interconnections.

Importance for the USA

Current reforms in Mexico to both the electricity and energy sector provide substantial opportunities to US shale gas producers and service companies to partner with or to service Petróleos Mexicanos (PEMEX). Previously the Mexican constitution limited their role. Emilio Loyzaya, the CEO of PEMEX stated that PEMEX needed three key contributions from the international community (1) Technology (2) Finance and (3) Human Capital.

Magazine Issue 2 Cover
The full article, by Mark Storry, is available in Issue 3 of Shale Gas International Magazine and can be found on page 12.