| MEXICO CITY, Sept 12
MEXICO CITY, Sept 12 An official with state oil
company Pemex predicted on Wednesday that Mexico would be able
to end natural gas imports by 2017, but some analysts found the
"It is totally feasible," said Carlos Morales, director of
Pemex Exploration and Production, after a speech at the annual
Mexican Petroleum Congress, a four-day gathering of foreign and
national industry executives.
Morales said Pemex does not expect current low
natural gas prices in North America to prevail for long a nd,
without directly saying so, he indicated that rising prices
would lead to increased Mexican gas production.
"Demand for natural gas is also increasing in the United
States, and that's going to bring prices back to more attractive
levels for producers," Morales said.
Mexican natural gas production is down nearly 5 percent this
year. Since 2009 domestic production has dropped 9 percent,
according to the Mexican Natural Gas Association.
"Whether Mexico will be able to come up with the production
to make up for the imports, I would say that's a big challenge,"
said Luis Labardini, a partner at Mexico City-based energy
consultancy Marcos and Associates.
Labardini said that Pemex has prioritized oil projects over
gas projects in Mexico's Burgos and the Veracruz basins, home to
the country's large non-associated natural gas deposits.
"Right now, I can't see any reason to believe that Mexico's
(natural) gas production is going to increase significantly in
the medium or long term," said independent oil analyst David
Shields, who is also based in Mexico City.
"All of that will depend on the price of gas," he added.
"With the current price of gas, there's just no market incentive
to increase production."
Due largely to increased supplies, U.S. natural gas prices
remain very low, hovering around $3.00 per million cubic
feet. They are down more than 75 percent since 2008.
Mexico's natural gas imports have been rising, reaching 790
million cubic feet last year. They are expected to hit 934
million cubic feet this year.
According to the U.S. Energy Information Administration
(EIA), Mexico boasts the world's fourth-largest reserves of
shale gas in deposits that may contain rich pockets of both
natural gas and more profitable oil.
The EIA estimates that Mexico, the world's No. 7 oil
producer, has up to 680 trillion cubic feet (tcf) of natural
Early Pemex studies are more conservative than the EIA
estimate and see between 150 and 459 tcf of shale gas in five
different geological provinces in the country.