Governments, energy firms, and International Organizations have their eyes on Mexico’s energy industry as President Andrés Manuel Lopez Obrador (AMLO) seeks to nationalize Mexico’s energy sector, once again, largely rejecting the global transition to green. Its dirty fossil fuel operations and questionable safety measures have led several powers to criticize the country’s energy sector and demand better oversight.
Mexico’s dirty fossil fuels appear to be getting worse as the rest of the world looks for ways to improve its oil and gas operations. Mexico has been accused of increasing its gas flaring from gas operations in recent years. Under the previous administration, Mexico set a target to end gas flaring by 2030. However, World Bank data suggests that the country’s flaring has increased by 67 percent, from 3.9 billion cubic metres annually in 2018 to record levels of 6.5 billion cubic metres in 2021. The Perdiz/Ixachi oilfield in Veracruz and La Venta in Tabasco account for most of this flaring.
Meanwhile, Mexico’s oil production has been declining as its natural gas imports increase. As AMLO seeks greater energy independence, the potential for a greater surge in gas flaring is worrying. Mark Davis, CEO of the flaring analytics company Capterio, stated that the rise was “due to higher poorer operational performance with much higher ‘flaring intensity’ (flaring per barrel of production)”.
Oil companies typically burn excess gas to flare as it is cheaper than reusing or selling the gas. While carbon capture and storage technology is becoming an increasingly popular way of disposing of this gas, decarbonizing operations, particularly across the U.S., require significant investment. Following the COP26 climate summit, many countries around the world are now acting to reduce their greenhouse gas emissions, meaning that the pressure is mounting for Mexico to do the same.
In 2020, state-owned oil firm Pemex highlighted inadequate infrastructure as the main obstacle to improving practices. AMLO has been putting pressure on Pemex to increase production levels in recent years to promote greater energy self-sufficiency, leading the company to increase operations in more reliable shallow waters rather than deep-sea projects. But Pemex faces high levels of debt, around $100 billion, and is receiving little public funding, making it difficult to boost output.
With information from El Financiero