Canada Business Group Pushes for Pipeline Expansion in Mexico

Canadian companies could help Mexico reduce its lopsided dependency on imported US natural gas by maximizing its own domestic supplies of the fuel, according to the head of Canada’s top business group.

While Mexico has for decades been a major oil producer, local natural gas output has failed to keep up with demand as it instead favored imports from US suppliers, mostly across the border in Texas.

But Canadian firms see opportunities to increase investment in Mexican energy, said Business Council of Canada CEO Goldy Hyder after meeting with President Claudia Sheinbaum. Executives from major pipeline builders ATCO Ltd and TC Energy Corp were present at the sit-down with the Mexican president at the Group of Seven summit in Kananaskis, Canada.

“There was a general feeling that it’s in Mexico’s interest to diversify more its sources of energy. It’s dependent on natural gas in the United States. And so obviously Canada can be very helpful in that regard,” Hyder said. “We have projects that are already taking place there that are going to allow Mexicans to have energy security because the gas is in Mexico and it’s being extracted.”

State-owned Petroleos Mexicanos, known locally as Pemex, has struggled for years to boost its natural gas output at home. But due to a growing network of pipelines, Mexico’s reliance on gas from Texas sharply scaled up beginning around 15 years ago as US shale projects took off. More than 70% of the Latin American economy’s demand for the fuel is now satisfied via cross-border imports.

Sheinbaum met with the business council on Monday prior to her meeting with Canadian Prime Minister Mark Carney on Tuesday. US President Donald Trump’s unexpected return to Washington late on Monday led to the cancelation of what would have been his first in-person meeting with Sheinbaum. That sit-down was seen as one of the primary reasons for the Mexican president’s attendance as an invited guest.

Sheinbaum’s likeminded predecessor, Andres Manuel Lopez Obrador, sought to wean Mexico off of imported fuel supplies while prioritizing more domestic refining capacity. Since she took office last October, Sheinbaum has mostly continued the policy though she has successfully pushed a reform to encourage private partnerships with Pemex.

“We have the technological knowhow, we have the capital to invest and deploy, and you have a desire to not have all your eggs in a single basket about where you get your energy. And so we can help increase your energy security,” Hyder said. “What the president and others were describing is more that we’re looking for ways to promote the participation in an accelerated way of foreign companies to invest in Mexico.”

As Pemex struggles to lift slumping production and dig itself out from under a roughly $100 billion debt burden, tie-ups with private and foreign firms could help if Sheinbaum’s government gets on board. 

Mexico imported more than 7.1 billion cubic feet of natural gas per day from the US during peak season in August last year, according to data from the US Energy Information Administration.

TC Energy’s 700-kilometer (444 mile) Southeast Gateway Pipeline is soon expected to begin delivering up to 1.3 billion cubic feet of natural gas produced in Texas to southern Mexico. The Canadian firm partnered with Mexican state utility Comision Federal de Electricidad on the project. Once online, it will enable two major power plants to burn natural gas instead of oil and diesel.

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