Mexico’s energy market has opened to foreign investment in recent years, and U.S. investors have taken note. Under the United States-Mexico-Canada Agreement (“USMCA”) signed last month, which will replace the North American Free Trade Agreement (“NAFTA”), these investments should be protected.
In 2013, Mexico passed an expansive energy reform bill, ending Pemex’s national monopoly on production and sales and giving many international investors the chance to access the Mexican energy market for the first time. Since this reform, U.S. exports of gasoline and natural gas to Mexico have grown exponentially, and U.S. energy companies—many of which are headquartered in Texas—have taken advantage of opportunities to enter into government contracts to develop Mexico’s offshore oil and gas resources. U.S. investment in Mexican energy is a natural partnership: As Mexican energy demand has grown in recent years, its national production has dropped, leading to an increased reliance on foreign imports. The story north of the border is markedly different. Largely as a result of the U.S. shale boom, natural gas production has increased dramatically, and U.S. companies now supply 65 percent of Mexico’s natural gas. Mexico is also the No. 1 market for U.S. LNG exports, which have more than doubled since 2013.
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