Mexico could boost natural gas output with fracking investment

Mexico has faced significant pressures regarding its reliance on U.S. natural gas exports, primarily linked to concerns about border security and drug trafficking. As a response, the Mexican government has targeted increasing domestic production to reduce dependency. Historically, political constraints have hindered such developments, resulting in inadequate gas production levels compared to imports from the United States. Although Petróleos Mexicanos (Pemex) has achieved several successes in gas production, government taxes and political decisions have left the company struggling financially. Recent shifts under President Andrés Manuel López Obrador's administration, which included reversing beneficial reforms allowing private investments, have further complicated the situation. However, the new administration under Claudia Sheinbaum seems to exhibit a more favorable stance toward fracking. She has authorized investment in this practice, potentially enabling Mexico to meet its gas production goals by 2030. Estimates suggest that Mexico holds substantial shale gas resources, particularly in areas influenced by the U.S. Eagle Ford shale basin. If allowed to expand its fracking initiatives, Mexico could enhance its production levels significantly. In practical terms, Mexico could import equipment and expertise from the U.S. shale industry to accelerate this process. While political consequences may arise from this shift, the economic benefits, including increased revenue and improved trade balance, are increasingly appealing to the Mexican government. Should these changes proceed as expected, Mexico has the potential to increase domestic gas production and reconfigure its energy landscape for the future.