Mexico’s Tabasco state aims to expand energy potential beyond oil industry

• Economic minister expects new natural gas infrastructure will increase local demand
• Renewable energy potential underdeveloped but significant
• State offers logistical advantages to companies: minister

MEXICO CITY (ICIS)–Some of the flagship projects Mexico’s federal administration is developing could further boost the energy potential of Tabasco, according to Jose Friedrich Garcia, head of the state’s economic development ministry.

Some of these projects would help increase Tabasco’s access to natural gas, which would in turn incentivise local demand for this hydrocarbon, Garcia said.

“Natural gas is a driver for development; investments begin materialising as availability of the resource increases,” the minister said.

One of these projects is the reconfiguration of the Cempoala gas compression station, which is currently in its second phase. Federal authorities are mulling the option of flowing south Texas gas to Tabasco via Cempoala once the state’s demand needs require it, Garcia said.

The official also expects that the future interconnection between the recently-completed Cuxtal pipeline and the national Sistrangas grid would translate into future gas availability for Tabasco.

State authorities are also betting on domestic gas availability, which is set to increase when some offshore oil and gas fields awarded under the post-energy reform oil auctions begin producing in around five years, Garcia said.

Macuspana, the hometown of president Andres Manuel Lopez Obrador (AMLO), is home to important natural gas reservoirs that have yet to be developed, the minister said.

While demand for natural gas is still incipient in Tabasco, there is significant potential for growth as the state has a booming agro-industrial sector, which is in turn a large consumer of electricity, according to Garcia.

The minister said local forestry firm Proteak is the only company in the state directly interconnected to the Sistrangas, but noted some other companies have already expressed interest in securing a future connection.

The creation of industrial parks would foster more demand for natural gas. State authorities are hoping that the completion of the Tehuantepec isthmus trade corridor -another  project of the administration- can help industrialise the area.

RENEWABLE ENERGY POTENTIAL

Although still undeveloped, Tabasco has potential for renewable energy. It is not as large as other Mexican states, but it offers opportunities for diversification.

According to information from Tabasco’s economic development ministry, a study by consultancy PwC found that Tabasco offers investment potential in renewable energies of almost 2GW over the next five years in hydropower, solar and wind power, biomass and biofuels.

State authorities are mulling the possibility of developing small-scale hydropower systems in some communities to make use of that potential, Garcia said.

In the case of biomass, the official said Tabasco offers significant potential due to the state’s forestry production, one of the largest in the country.

Tabasco’s local installed generation capacity is still quite limited. At the end of 2019, the state was home to 367MW of efficient cogeneration and 56MW of turbogas in plants belonging to state oil company Pemex, according to the 2020-2034 programme for the development of the national power system (PRODESEN).

Capacity belonging to private developers as of that date was 4MW in bioenergy and 267MW in efficient cogeneration, according to the PRODESEN.

EFFORTS

In addition to economic development ministry SEDEC, Tabasco also has an energy development ministry. While the former is in charge of attracting energy infrastructure investments for the state, the latter is tasked with addressing energy transition matters and social issues, serving as a liaison between companies and local residents.

SEDEC also seeks to promote national content and connect energy developers with local suppliers.

The administration’s recent attempts to change the law and regulations governing the power market has not had any effects on investors’ appetite in Tabasco mainly because the renewables sector was not as developed as in other states, said the minister.

Garcia is confident that Tabasco can become an investment hub for other energy sector areas besides oil and gas due to its competitive advantage because of its location and proximity to major infrastructure.

“Tabasco is a very attractive place to invest. SEDEC can provide all the guidance prospective investors need,” he said.

Angeles Rodriguez