With Trump in office, Mexican demand for U.S. gas falls into question

With Trump in office, Mexican demand for U.S. gas falls into question

By James Osborne

WASHINGTON – Tensions between the United States and Mexico following the election of Donald Trump are raising concerns that a large and growing market for U.S. natural gas could be cut short, hurting Texas producers and pipeline companies investing billions of dollars to supply utilities, factories and other customers south of the border.

Already, officials in Mexico, which relies on the United States of about three-fourths of its natural gas imports, are in discussions about finding alternative sources, given Trump’s campaign promises to scrap the North American Free Trade Agreement between the U.S., Mexico and Canada and build a wall on the southern border, said Jose Antonio Prado, an attorney in Mexico City who formerly served as general counsel for the government-owned power utility, Comisión Federal de Electricidad.

“The Mexican government has relied on gas from Texas and other parts of the world,” he said in an interview last week. “If you have a president that has shown not to be very friendly with Mexico, you’d have to take your precautions about that. It’s about not having all your eggs in one basket.”

It remains to be seen whether Trump carries through with pledges that could potentially sour relations with Mexico, but the implications for the U.S. and Texas energy sectors could be large. Any moves by Mexico to reduce U.S. imports could endanger a growing business for U.S. pipeline companies as President Enrique Pena Nieto has steadily moved his country to buy more of the cheap natural gas flowing from shale fields such as Texas’ Eagle Ford since the advent of the hydraulic fracturing boom.

Companies including Spectra Energy of Houston, Energy Transfer Partners of Dallas, and Calgary-based Transcanada, which has a large presence in Houston, are all in the process of developing multi-billion dollar pipeline projects running across the border. Kinder Morgan has announced plans to expand existing pipelines running into Mexico from Texas and Arizona.

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