Mexico moved away from regulated propane prices towards market-based wholesale prices throughout 2017
The value of Canada’s propane exports to Mexico totaled $204.7 million in 2017, an increase of nearly eight times from the $25.4 million exported in 2016, according to the National Energy Board of Canada.
While these propane exports represent a small fraction of Canada’s total propane exports in 2017, the growth in recent years has been substantial. In 2017, exports of propane to Mexico were 7% of total Canadian propane exports.
The volume of propane exported from Canada to Mexico grew from zero in 2014 to 583 million litres in 2017. The majority of exported propane goes through the U.S., where it can change ownership before continuing to Mexico.
In recent years, western Canada has been oversupplied with propane, resulting in low prices at the Edmonton hub. There are limited pipeline options for shipping propane within Canada, so most propane is moved by rail.
Low Edmonton prices made western Canadian propane increasingly attractive for buyers in the U.S. and prompted more volumes moving into Mexico.
Increased propane exports from Canada to Mexico were also facilitated by increased western Canadian propane production, the easing of Mexico’s energy import restrictions, and new rail loading capacity in western Canada.
In previous years, Mexican companies had to import propane through the state-owned petroleum company, Petróleos Mexicanos (PEMEX). As of Jan. 2016, private companies began importing their own propane.
In addition to the lifting of import restrictions, Mexico moved away from regulated propane prices towards market-based wholesale prices throughout 2017.
Canadian propane exports to Mexico may continue to increase in the future since Mexico’s domestic per capita consumption of propane is among the highest in the world, while Mexico’s domestic propane production is declining.