Mexican state-owned oil company Pemex lacks the financial capacity to develop Mexico's unconventional gas resources through fracking on its own and will require the participation of private companies with specialized experience and significant investments in infrastructure, energy sector analysts warned following President Claudia Sheinbaum's announcement that Mexico will evaluate hydraulic fracturing. "Private companies would have to participate in the development of these projects under the economic, political, and legal certainty that any investor needs to risk their money in Mexico. This is not going to be resolved overnight," La Jornada reported. The Mexican Alliance Against Fracking, a coalition of more than 40 civil society organizations, pointed out that fracturing a single well requires between 9 and 29 million liters of water, and that the drilling pace in the U.S. consumes annually a volume equivalent to the domestic needs of millions of families. "I think that is one of the most important challenges," stated a former commissioner of the now-defunct National Hydrocarbons Commission, who asked not to be identified. He added that proximity to the United States, the world's largest gas producer with the lowest costs in the world, represents a significant competitive limitation, particularly ahead of the upcoming USMCA review. What is missing for fracking to develop in Mexico? Miriam Grunstein, director of Brilliant Energy Consulting, explained that the development of fracking in Mexico would first require substantial investments in infrastructure, including electrical supply, road access, and supply chains to reach the relevant fields. It would also be necessary to solicit exploration and production contracts to attract small and medium-sized companies willing to assume the associated risks and costs. Drilling a well in the U.S. costs between $1 and $2 million thanks to its consolidated infrastructure, compared to $7 to $8 million in Mexico. "Companies that are truly specialized in fracking are already fully occupied in the United States, which has very large reserves," Grunstein noted. Grunstein added that the development of fracking in Tamaulipas would also require reviewing port infrastructure to ensure adequate supply chains, recalling that the port of Corpus Christi, Texas, had previously sought a cooperation agreement with Tampico before the previous administration canceled the corresponding tender. She acknowledged that drilling techniques and water treatment have improved, but emphasized that it is essential to have strict regulations in terms of environmental and industrial safety. "We must exploit our natural resources, but under appropriate conditions."
Pemex Needs Private Investment for Fracking Development in Mexico
Analysts warn that Mexican state-owned company Pemex cannot independently develop unconventional gas resources through fracking. To attract private investment, economic and legal certainty, as well as significant infrastructure investments, are needed. Key challenges include high drilling costs, competition with the U.S., and environmental risks.
