Market Analysis of the Natural Gas industry in Mexico Case Study

Market Analysis of the Natural Gas industry in Mexico - Case Study Example research is to provide a brief overview of the current stage of the natural gas industry in Mexico and to analyze the potential effects of the recent economic reforms for the private industry. According to the EIA estimates, Mexico is one of the four leaders in shale gas reserves. By 2013 Mexico’s natural gas reserves have reached 488bn cubic metres (Mexico Oil & Gas Report, 2014). Even though the natural gas production in Mexico has grown almost by 50% since 2000, demand for this natural resource also has grown significantly (by 80% since 2000) (Seelke et al., 2014). Natural gas in Mexico is mainly consumed for the national electricity generation and for oil operations support. The figure 1 visually illustrates that the increase of production scales still fail to satisfy current demand for natural gas. According to the Congressional Research Service, Mexico’s gas reserves are on the decline and fail to satisfy local demand because of underinvestment in exploration of the natural gas resources. Due to continuously rising demand of natural gas, Mexico relies heavily on the import of natural gas from the US. Thus, for example, in 2000, Mexico imported about 100% of its natural gas imports. However, by 2006, the country has diversified the range of countries-importers of the natural gas, and began to import liquefied natural gas from Peru, Qatar, and Nigeria (Seelke et al., 2014, 2014). There are three liquefied natural gas import terminals in Mexico: one on the Atlantic side and two terminals on the Pacific side (Seelke et al., 2014, 2014). The experts believe that the natural gas reserves have potential for growth and forecast that it will reach 500 bn cubic metres by 2018 and 505 bn cubic metres by 2023 (Mexico Oil & Gas Report, 2014). Partially this positive forecasts are referred to the Pemex’s activities in relation to deepwater natural gas exploration, and, partially, as a result of expected increase of private sector participation in result of new