Mexico has been speaking to private sector companies about increasing fracking to reduce its reliance on U.S. gas amid heightened trade tensions between the two countries, the Financial Times reported on Tuesday.
Imports, which are almost entirely from the United States, meet 72% of the total demand for natural gas consumed in Mexico.
Any policy change to effect the expansion in fracking could, however, take months to materialise with the discussions still being at a preliminary stage, the FT said, citing four executives with knowledge of the discussions, who added that companies are interested in investing.
RBN Energy, a market advisory service, wrote in a recent note that U.S. imports, mostly from the Permian and the Eagle Ford Basins, have increased threefold over the past decade. Mexico’s own production has declined rapidly, it noted, adding that much of its gas is considered unusable because of the high nitrogen content.
Mexico has already been weighing measures to double its strategic natural gas storage capacity over fears that U.S. President Donald Trump could use the country’s dependence on U.S. gas as some form of leverage.
Natural gas is used mainly to generate electricity and for industrial activities. The vast majority of natural gas imports to Mexico are carried by pipeline.
(Reporting by Kanjyik Ghosh in Bengaluru; Editing by Jamie Freed and Lincoln Feast.)