Mexican Energy Dependence & Exposure

ByMaría Aneiros

This article by María Aneiros originally appeared in the February 20, 2026 edition of Des Informémonos.

The aggressive foreign policy of the United States has returned energy to the center of the geopolitical dispute. In a scenario where Washington is hardening its stance and redefining alliances based on its strategic interests, energy security is once again becoming a valuable bargaining chip. Faced with the potential reconfiguration of crude oil trade in Latin America, driven by renewed US interest in Venezuelan oil, Mexico, which for decades has acted as a central component of the US energy apparatus in the region, could find itself in a particularly vulnerable position.

Sandra Kanety Zavaleta, coordinator of the Center for International Relations at the Faculty of Political and Social Sciences of the National Autonomous University of Mexico (UNAM), points out: “The United States considers Mexico its main customer.” The reality of the relationship between the two countries is marked by a profound asymmetry. “We cannot speak of an equitable relationship or one based on equality. What we have is a deep dependency,” she explains, asserting that Mexico is far from being energy sovereign.

For Luis Fernando Pérez, a researcher at Geocomunes, this situation is not accidental, but the result of an integration process that was consolidated over decades.“Mexico configured its entire exploitation based on the needs that the American oil industry required,” he points out as a key piece to understand how a country originally rich in fossil fuel reserves ended up subordinating its energy model to the dynamics of the American market.

The Origin of Dependency

Mexico continues to pay the price for not having known how to manage its energy wealth. “We used oil to pay off the debts we got ourselves into, and the United States took advantage of that circumstance to impose conditions that were complicatedly difficult to meet,” explains Gonzalo Monroy, energy expert and director of GMEC.

In the second decade of the 20th century, Mexico was already the world’s second-largest oil producer, second only to the United States. “The oil boom that had transformed the fields of Louisiana, Oklahoma, and Texas crossed the border and reached the coasts of Veracruz, and truly extraordinary cases occurred.”Gonzalo Monroy recounts. The discovery of natural crude oil seeps on the surface sparked the interest of private companies, mainly British and American, which, through a concession system, gained technical and exploitation control.

“The 1917 Constitution marked the first turning point,” Monroy asserts, citing the state’s first explicit attempt to protect its natural resources by decreeing that “the oil in the subsoil belongs to the Mexican Nation.” However, despite becoming a significant producer on the international stage and the formal owner of the crude oil, control of the industry, technology, and profits remained in private hands until 1938.

Following a labor dispute between foreign companies and oil workers, President Lázaro Cárdenas decreed the expropriation of the industry. “The expropriation was of the equipment, the infrastructure, the pipelines, the refinery, not the oil itself, because that already belonged to the Mexican people,” Monroy clarifies. The State thus recovered the physical assets, and a few months later, Pemex, the national oil company, was created. “The problem is that it lacked the specialization and knowledge to run a company,” notes the director of GMEC. The technical expertise, the commercial networks, and the financial capacity to operate remained in foreign hands. “That’s where a relationship began that continues to this day with the oil services company Schlumberger,” which Monroy identifies as the beginning of Mexico’s subordination to the United States: “It has been working hand in hand with Pemex since its inception: training it, providing financing, and giving it credit to continue operations.”

The global context, with the world on the brink of World War II, triggered a surge in demand for crude oil, and Mexico solidified its position as a strategic producer in the West. Pemex became a symbol of sovereignty, but underlying vulnerabilities remained, and its operations depended on foreign companies and capital.

In the 1970s, this dependence on foreign sources became firmly entrenched when Mexico borrowed heavily in international markets, primarily from US banks, to finance the newly discovered Cantarell oil fields. “Production and exports skyrocketed once again, putting Mexico back in the big leagues,” says Gonzalo Monroy. In the 1980s, the promise that the profits would cover the hole in the national finances vanished. The international price of oil plummeted, interest rates in the United States soared, and the model collapsed.

The external debt became unpayable, and oil went from being a promise of development to a guarantee of financial bailout. Crude oil exports became collateral for restructurings negotiated largely according to the needs of the U.S. financial system. “Mexico wasn’t taking advantage of its wealth; it was simply to pay for everything we had done before,” Monroy summarizes. The energy relationship with the United States ceased to be solely commercial and became one of financial dependence.

The Risk of Becoming Dispensable

Since PEMEX’s last peak in 2003, production has steadily declined.“There isn’t a single field we could turn around and allow to produce even two million barrels again,” asserts Gonzalo Monroy, who adds that it’s necessary to examine its loss of relevance in the international market, which goes beyond mere quantity. “Mexico is producing less and less, and what’s more, it’s primarily heavy crude,” he points out as a limiting factor for Maya crude in the regional market.

“Maya crude has an API gravity of around 22–24 degrees, making it a heavy oil, necessary for refineries with coking plants, which are especially prevalent in Texas and Louisiana,” he explains, comparing this oil to others like Venezuelan or Canadian crude. “These refineries have the perfect business model,” he asserts, because they buy heavy crude at very low prices, knowing that it is limited to certain types of refineries and more complex processes, and sell gasoline and diesel as if it came from light crude.

There is a clear gap between the infrastructure built and the current productive reality of the country, which sooner rather than later will affect Mexico’s position in the international oil market.

Most of the country’s refineries were also designed or adapted to process heavy crude and thus meet domestic production demands. However, Mexico does not extract enough oil to feed the six facilities it already has in operation, and that’s without considering that the recently opened Dos Bocas refinery in Tabasco will not operate at 100% capacity until 2027. There is a clear gap between the infrastructure built and the country’s current production reality, which will sooner rather than later affect Mexico’s position in the international oil market. “Mexico will have to face a dilemma: either it stops exporting and is forced out of the market, or it will have to import oil simply to keep its refineries running,” warns Monroy.

This discrepancy reduces the negotiating power with the United States, which remains the primary destination for Mexican crude. “The main competitor for Venezuelan crude today is not the United States, but Canada,” asserts Monroy, noting that refineries are seeking a steady supply at a good price. According to the energy expert and director of GMEC, Maya crude, with its limited production, “will become easily replaceable if Venezuela manages to increase its supply” and reintroduce heavy oil to the North American market. This seems increasingly likely following the recent easing of sanctions by the United States and the announcement of new licenses allowing international oil companies to resume operations in Venezuela.

Another perspective is offered by Luis Fernando Pérez, who points out that even with alternative and aggressive extraction models like fracking, which could significantly increase production, Mexico continues to perpetuate its dependence. “Who would they buy that technology from? Who would they have to partner with? Well, obviously, with American companies,” Pérez argues, setting aside the environmental problems of these extraction methods in his hypothesis and highlighting the undesirability of an industry shift toward them. “Pemex invests, the Mexican consumer pays, and the foreign contractors, mainly American, take no risks but always win,” he concludes.

An Electrical Grid Linked to the North

Today, Mexico’s energy sector is no longer based on crude oil, but on natural gas. Around 60% of the country’s electricity is generated using this resource, and 70% of that natural gas comes from the United States. “This is an extremely high level of dependence that could jeopardize the nation,” explains Sandra Kanety Zabaleta.

While the impact of oil is usually perceived in macroeconomic or fiscal terms, gas sustains daily life. “We must understand that if the United States decides to cut off the supply tomorrow, the country would be plunged into darkness, with all that this implies,” Kanety warns. Hospitals, water systems, food refrigeration, transportation, and homes depend on a constant flow of gas that crosses the country’s northern border, and whose stability, Kanety warns, “we cannot take for granted in the current geopolitical landscape.”

The paradox is that Mexico had significant gas reserves for decades, especially in the Campeche region and the Burgos Basin. However, during the 1970s and 80s, at the height of the oil boom, natural gas was treated as a byproduct of crude oil and not as a strategic resource for domestic consumption. “What happened was that Mexico focused entirely on oil and stopped producing that gas,” explains Gonzalo Monroy. Mexico did not develop a national strategy for its reserves and never consolidated a nationwide gas infrastructure.

As a result, in the midst of the financial crisis of the mid-1990s, the state had to acknowledge its economic inability to expand the infrastructure on its own and opened the door to private participation so that this economic injection could accelerate the construction of gas pipelines and modernize the system without further compromising public funds. “It allowed for greater private participation in pipeline transportation and natural gas distribution. This did not include production, but it did include everything related to marketing and opening new markets,” explains Gonzalo Monroy regarding the reform of Article 27 of the Regulatory Law on Natural Gas, which came into effect in 1997.

For Luis Fernando Pérez, a member of Geocomunes, this dependence is not the result of an isolated decision, but rather a process that “has been developing for 30 or 35 years.” The North American Free Trade Agreement began to consolidate an energy model geared toward supplying cheap gas to industries located along the northern border. “To respond to this, Mexico began to convert its electricity sector to gas,” he explains. By 2014, the Federal Electricity Commission (CFE) had already transformed a significant portion of its generation capacity to operate combined-cycle gas turbine power plants.

The final blow to Mexico’s hopes of achieving some energy independence through its own reserves came then, when the international context tipped the scales. “Fracking began to flourish in the United States, and we saw its oil production grow exponentially, to the point that the resulting natural gas supply caused prices to plummet,” Monroy points out as a turning point for understanding the current situation. The abundance of cheap gas across the border made importing it more profitable than investing in the development of domestic basins. “The CFE (Federal Electricity Commission) understood that it had to secure its natural gas supply in order to guarantee its own supply,” and, following this logic, it expanded its role beyond electricity generation to become a central player in the contracting, transportation, and marketing of gas.

The country’s electrical security became structurally tied to the availability and price of a foreign input, especially that of its northern neighbor, which in 2025 accounted for between 70 and 75% of total national gas consumption. “I think the clearest and most recent example of how vulnerable we are was the winter storm in Texas in 2021,” says Luis Fernando Pérez. In February of that year, gas wells and distribution systems froze, and although the supply to Mexico didn’t stop completely, it was significantly reduced and shook the entire electrical system. “In just three days, chaos ensued, and prices skyrocketed,” recalls Pérez, who maintains that the problem wasn’t worse thanks to the CFE’s management: “They managed to contain the immediate impact, but the cost overruns generated by that crisis still appear in their financial statements,” he asserts.

“Mexico’s extremely high dependence on gas is highly beneficial to the United States because in many ways it helps the US, as a superpower, to consolidate its sphere of influence in what it has historically considered its closest area of ​​influence,” explains Sandra Kanety, who warns of the extremely vulnerable position this places Mexico in. “If the United States were to decide to negotiate issues such as migration or weapons using its power over natural gas, Mexico would be completely subordinate to Washington’s interests,” she asserts.

An Energy Transition Without a Roadmap, & Fewer Cards to Negotiate With

In 2013, the energy reform that sought to promote the generation of renewable energy was seen by experts as a possible escape route for Mexico, potentially reducing its dependence on fossil fuels and the United States, and recovering, at least partially, its energy sovereignty.

In just three years, it achieved the lowest wind power generation price in the world, and the second lowest solar energy production price. “The problem was the lack of strategic planning,” explains Luis Fernando Pérez, pointing out the inconsistency of growing renewable energy without simultaneously initiating a decarbonization process. “The structure of the electricity system, sustained by gas, continued as it was and even expanded,” he notes.

The arrival of the Fourth Transformation with López Obrador in power prioritized state control over the electrical system, strengthening the Federal Electricity Commission (CFE). “The massive incursion into renewable energies was maintained primarily due to a political decision, not a technical one,” Monroy explains. The result was an interrupted energy transition and public investment directed toward keeping gas plants open and revitalizing the oil industry.

“Mexico has fewer and fewer bargaining chips,” says Luis Fernando Pérez, noting that the United States’ expansion into other gas markets has diminished Mexico’s influence, and the search for other suppliers doesn’t seem like a viable option either, both because of the gas transportation infrastructure costs involved and because of existing agreements and commitments. “They’re very long-term,” explains the Geocomunes researcher regarding agreements that he asserts “make no sense.” “CFE is committed to buying between 20 and 22 billion cubic feet per day. Mexico consumes roughly 9 billion per day,” Pérez points out.

In a context of geopolitical reconfiguration, global competition, and the strategic use of energy as a tool of pressure, Mexico’s energy vulnerability ceases to be a technical issue and becomes a political problem of the highest order. “It’s a highly beneficial relationship for the United States,” asserts Sandra Kanety Zavaleta, but not because of the economic benefits, but because energy functions as “an instrument of pressure and domination in a historically tense relationship.”

Without a planned transition, without genuine diversification, and with declining oil production that no longer guarantees its own market share, Mexico faces a scenario in which neither gas nor oil operate as strategic levers. Energy, which for decades was presented as a symbol of sovereignty, now limits its decision-making and negotiating power in a profoundly asymmetrical relationship.