World News 12/01/2015

Mexican energy reform will allow country to reduce dependence on fertilizer and imports of staple foods

After decades of underinvestment, Mexico’s natural gas pipeline network faces severe limitations in capacity and geographical coverage; consequently, the country is facing limitations in meeting domestic demand and dependency on imports of both nitrogen fertilizers and staple foods, according to a new policy paper from Rice University’s Baker Institute for Public Policy

Mexican President Enrique Peña Nieto’s energy reform and regulatory changes that give incentives to policies to increase production of ammonia and urea could help change that, according to Adrian Duhalt, a nonresident scholar in the Mexico Center at the Baker Institute. He shares his perspective in a policy paper titled “Natural Gas Supply and Production of Ammonia and Urea in Mexico: Structural Setbacks and Policy Implications.”

Duhalt, who is also an associate professor at the Universidad de las Américas Puebla, is available to comment on these and other developments related to Mexican energy reform.

“The production activities of several important industrial sectors in Mexico depend on an inadequate supply of natural gas,” Duhalt said. “To correct this, the government has launched an aggressive program to upgrade natural gas transport capabilities. However, Mexico is likely to see stronger consumer demand in the years to come. The country possesses important natural gas reserves that it does not have the capital to exploit. The recent energy reform in Mexico aims to correct this shortcoming by attracting foreign investment in the natural gas sector.”

Duhalt said the government’s recent natural gas-related infrastructure program and energy reform are designed in part to help decrease the country’s reliance on imports of fertilizers (urea) and basic food staples, which stand at approximately 70 percent and 43 percent of domestic consumption, respectively.

“Increasing natural gas production and infrastructure will contribute to gains in ammonia and nitrogen fertilizer production, which would in turn have a positive impact on Mexico’s agro-industry,” Duhalt said.

di S. C.