FT: Mexico’s energy strategy faces crucial turning point with potential fracking revival

Mexico's government is in talks with the private sector about expanding fracking as concerns grow over the country’s reliance on US natural gas amid trade threats from President Donald Trump.

According to four executives familiar with the discussions, quoted by the Financial Times, with 70% of Mexico's gas supply coming from the US, the unpredictability of US policy could leave parts of Mexico without power.

The move towards fracking marks a shift for President Claudia Sheinbaum’s left-wing government, which has long opposed the practice due to environmental concerns. However, in an effort to achieve energy independence, Sheinbaum, a former climate scientist, has directed officials to explore fracking and has asked companies to assess the potential for developing Mexico’s shale gas reserves. Although fracking is legally allowed in Mexico, its current use is limited.

Mexico holds the world’s sixth-largest recoverable shale gas reserves, and tapping into these resources could offer an economic boost as the country faces the risk of recession. Though discussions are still in the early stages, the government’s new approach could signal a change in energy policy. Investment could come through a newly passed public-private partnership model, according to executives.

Sheinbaum has outlined a goal to increase Mexico’s domestic natural gas production to 5 billion cubic feet per day by 2030, up from 3.834 billion, using “sustainable” methods. Victor Padilla, CEO of the state oil company Pemex, has indicated the government’s interest in reviving fracking, acknowledging the need to explore unconventional resources as conventional reserves are nearly exhausted.

The shift in policy reflects the government's challenge of balancing energy independence and Pemex’s rescue efforts with the goal of increasing clean energy. While President López Obrador proposed a ban on fracking, Sheinbaum is now navigating a new environment of trade protectionism. Reactivating fracking, however, could damage her international image as a climate advocate, and the practice’s ecological risks would likely ignite opposition within her party.

Mexico’s need for additional revenue and the financial strain of Pemex, along with concerns over the country’s budget deficit and potential recession, further complicate the situation. 

By Tamilla Hasanova