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Mexico allocates $11B to tackle gas shortages, economy

Keywords: Tags  natural gas, gas shortages, Pemex, Petroleos Mexicanos, Mexico investment, Mexican economy, Pena Nieto, Concamin Rodrigo Alonso


MEXICO CITY — Mexico’s government is investing more than 150 billion pesos ($11.3 billion) in natural gas to combat supply shortages and strengthen its economy.

Critical alerts issued to the manufacturing sector by state-owned oil and gas company Petróleos Mexicanos SA de CV (Pemex) on natural gas consumption might have led to losses of around 1 percent of the country’s gross domestic product (GDP) thus far this year, according to an estimate released this week by Enrique Peña Nieto’s administration.

Natural gas output, which totals about 5.7 billion cubic feet per day, "fell by 0.5 percent over the first half of the year," according to data from the president’s first annual report. Imports of natural gas accounted for 35.6 percent of domestic natural gas sales in the first half of the year.

Mexico’s steel sector has been the industry most affected by the critical alerts over the past several months.

The steel industry has to decrease its production for every day of the critical alert period issued by Pemex, generating losses of up to $150 million, according to national industry body Concamin.

Pemex issued 36 alerts in January-to-November 2012.

In his first state-of-the-nation speech on Sept. 2, Peña Nieto asked for the approval of his energy reform proposal, which would open up oil and gas exploration to private and foreign investment.

If the presidential energy reform is approved, Mexico would import 3 billion cubic feet per month of liquefied natural gas through the Manzanillo and Altamira ports until the end of 2014, according to figures from Pemex.

Additionally, Peña Nieto confirmed that the government expects to investment about 4 trillion pesos ($311 billion) in public and private infrastructure projects over the next six years.

However, the government has halved its 2013 GDP growth forecast to 1.8 percent from 3.5 percent due to lower domestic consumption and weaker demand for the country’s exports.

A version of this article was first published in AMM sister publication Steel First.


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