Gas-short Mexico made headlines in the summer of 2024 by launching its first LNG exports from New Fortress Energy’s Fast LNG project offshore Altamira on its Atlantic coast.

In joining the U.S., the world’s largest LNG exporter, Mexico’s initial LNG exports coupled with Canada’s upcoming LNG exports slated to flow in early 2025 will position North America as a dominating LNG exporting region and solidify its place in the global market.

Texas is home to the prolific Permian Basin and Eagle Ford Shale. These resources already play an important role in Mexico’s piped-gas import space, helping the Latin American country cover its growing demand for gas for electricity generation.

Texas shale is the backbone of piped-gas exports to Mexico. In 2024, these volumes are set to comprise around 91% of U.S. piped gas shipped to Mexico. California and Arizona are expected to chip in for the remaining 6% and 3%, respectively, according to Hart Energy analysis.

Mexico’s entrance into the LNG exporting space was arguably long overdue. Its strategic location, with access to the Atlantic and Pacific oceans, offers the country an ability to easily serve Europe, Asia and South America and allow LNG cargoes to bypass the Panama Canal and all that entails.

To be fair, Mexico’s long-awaited entrance into the LNG exporting club related to two factors: a lack of gas reserves and production, and continued demand for piped-gas and even LNG imports to fulfill domestic gas demands.

Unsurprisingly, none of these headwinds have been resolved completely. But, two things have changed to allow Mexico to join the LNG exporting club.

That first relates to its ability to rule out almost completely its reliance on LNG imports from Latin America and other countries. Mexico’s reliance on LNG imports has been reduced dramatically due to a higher and increasing dependence on piped-gas imports from the U.S. Let’s just call it better and quicker access to low-cost supply.

The second relates to the latter part of the first. An abundance of U.S. piped-gas to supply Mexico’s growing demand for gas for electricity generation has also been tapped to anchor Mexico’s entrance into the LNG exporting club.

In the LNG space, feedgas from the Eagle Ford is the backbone of New Fortress Energy's Fast LNG project offshore Altamira.

The first phase of New Fortress’ Altamira project, FLNG 1, is authorized to export up to 1.4 million tonnes per annum (mtpa) of LNG. The first cargo shipped in August 2024. A potential second phase, FLNG 2, could double the project’s capacity to 2.8 mtpa by 2026. Whether that’s 100% Eagle Ford feedgas, only time will tell. But it will most likely come from Texas.

Mexico's LNG export capacity of 2.8 mtpa may seem modest compared to the U.S.' 86 mtpa, but the Latin American country has significant growth potential, particularly along its Pacific Coast.

According to data compiled by Hart Energy, Mexico could develop up to 59.1 mtpa of export capacity through five key Pacific Coast projects: Saguaro Energia LNG (30 mtpa), Energia Costa Azul (15.3 mtpa), Amigo LNG (7.8 mtpa), Vista Pacifico LNG (3 mtpa) and Salina Cruz LNG (3 mtpa).

In a nutshell, Mexico’s initial LNG potential looks like this: 2.8 mtpa (Atlantic Coast) plus 59.1 mtpa (Pacific Coast) for 61.9 mtpa. Not bad, especially considering almost all the feedgas will come from Texas.

But getting there for Mexico will not be easy-peasy for a number of reasons, including difficulty attracting foreign investors willing to invest billions of dollars in Mexico amid potential logistic and political headwinds, just to mention a few.

Nonetheless, this is an early snapshot of Mexico’s LNG exporting potential. While New Fortress is on the North American LNG score sheet, a number of other companies need to be added if Mexico is to truly emerge as a true LNG exporting potential. In that vein, the next company to get booked into the score sheet will be Sempra Infrastructure. After that there are a number of companies with projects that could add to Mexico’s LNG export capacity.

U.S. piped-gas trade with Mexico marks a significant milestone in cross-border energy cooperation, where Texas gas is not just helping to meet Mexico’s domestic demand but where the state has enabled Mexico's entrance into the global LNG market.

So, while it might be game on for Mexico in the North American LNG exporting space, there is a caveat.

That is, Mexico’s LNG export success this summer and to come will all be anchored by Eagle Ford and Permian feedgas. Probably not the best position for Mexico in terms of energy security, especially when considering political and weather volatility in the U.S., but it will have to work until it doesn’t.

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