A Project Nobody Wanted to Save
The Mexican subsidiary of U.S. energy giant Sempra has cancelled the Vista Pacífico LNG terminal project in Topolobampo, Sinaloa, disclosing the decision in its annual 10-K report filed with the U.S. Securities and Exchange Commission in late February 2026.
The official explanation points to a combination of factors: Mexico’s national energy regulatory commission denied Sempra Infraestructura a permit to construct the liquefaction plant, and both parties cited a shift in priorities. In December 2025, CFE and Sempra agreed to rescind their development agreement. The full story, however, is more layered.
The project’s roots lie in a broader restructuring of Mexico’s natural gas infrastructure under the previous administration. When Manuel Bartlett led the CFE, he launched a campaign to renegotiate contracts on a series of privately built pipelines financially anchored to the state utility, which he argued paid excessive tariffs for infrastructure it would never own. The contracts were eventually renegotiated on terms that satisfied both the CFE and the private parties involved — among them Sempra, then known as IEnova, along with TC Energy, Grupo Carso, and Fermaca. As part of the same effort, agreements were signed to develop projects that would increase throughput on the renegotiated pipelines and give them downstream commercial purpose. Vista Pacífico was one of them.
The terminal formally took shape in July 2022, when CFE and Sempra signed a memorandum of understanding covering several natural gas infrastructure initiatives, including the Topolobampo liquefaction facility. The project envisioned initial export capacity of between 3 and 4 million tonnes per year, with CFE acting as intermediary to buy U.S. natural gas and import it to Mexico via its pipeline network. At its peak it attracted genuine commercial credibility: TotalEnergies signed on to acquire one-third of Vista Pacífico’s production and take a minimum 16.6% stake, and the U.S. Department of Energy authorized re-exports of LNG produced at the terminal.
What ultimately proved insurmountable was a convergence of pressures. The permit denial was a significant blow, but environmental opposition had been building for years. More than twenty organizations — including environmental groups, fishing communities, and academic institutions — formally opposed the project, citing an impact assessment that identified at least 82 adverse environmental effects, most concentrated in the marine ecosystem. In January 2026, they wrote directly to President Sheinbaum and Environment Minister Alicia Bárcena demanding a Strategic Environmental Assessment. The United Nations also wrote to the Mexican government expressing concern about LNG developments across Sinaloa and Sonora.
Sempra’s own priorities had shifted in parallel. In September 2025, KKR raised its stake in Sempra Infrastructure to 65%, becoming its principal shareholder as part of Sempra’s broader pivot toward U.S. utility growth and a selective reduction of its Mexico exposure. Against this backdrop, Vista Pacífico had become a project that neither side had strong reasons to fight for.
Some analysts believe the project had originally functioned as a condition imposed by the López Obrador government in exchange for the permit that mattered far more to Sempra: the Energía Costa Azul terminal in Ensenada, designed to export LNG to Asian markets and backed by a $3 billion investment. By late 2025 the interests of both sides had converged around a quiet exit — one that stopped well short of a full rupture. Sempra retains ownership of its pipeline in the region and has reached a separate agreement with CFE to complete a bypass on part of the pipeline route, with Sempra funding the investment and CFE reimbursing it as the sole authorized user of the gas it carries. The Sheinbaum administration had inherited a project that had become an environmental flashpoint, Sempra was reorienting toward the United States, and the regulatory door had closed. The LNG terminal was wound down without much fanfare — but the broader relationship between the two parties quietly continues.
Oil Up, Taxes Down: Choosing Stability Over Revenue
The escalation of conflict in Iran — and the disruption of shipping through the Strait of Hormuz — has driven ongoing volatility in global energy markets, with Brent crude up around 40% since the war began. The impact on Mexico is structurally asymmetric. Higher crude prices offer support to Pemex’s export revenues, but the country’s dependence on imported fuels, though less than in previous years, and on natural gas means the shock still feeds directly into higher domestic costs.
The net effect of all this is hard to calculate and ultimately depends on what the government does with IEPS. Should the government freeze gasoline prices at P24 and cut IEPS correspondingly, then every $10 increase in the oil prices has a net negative effect on federal fiscal accounts of 0.13% of GDP according to Morgan Stanley estimates. But at a consolidated level, this needs to be offset by the extra profits Pemex will make from higher oil prices, and extra loses CFE will eventually incur from higher natural gas prices.
As mentioned, the government’s primary buffering tool remains the IEPS fuel tax, deployed as a macroeconomic stabilizer to absorb external price pressures and contain inflation. So far, reductions to the tax on regular gasoline have been avoided. On March 11, President Sheinbaum announced the renewal of a voluntary agreement with 96% of petrol stations to keep regular fuel below 24 pesos per litre — a way of avoiding a politically toxic “gasolinazo” without resorting to formal price controls. Medium term this is obviously not sustainable and eventually the government will have to choose between reducing IEPS on gasoline or allowing gasoline prices to climb.
At the same time, a 35% reduction in the IEPS tax on diesel was implemented for the week of March 14–20, in response to pressures already building in logistics and transport. Pemex raised wholesale diesel prices by 10% last week, but freight transporters have reported per-litre costs rising by as much as 15%, significantly increasing their operating costs.
The fiscal trade-off is explicit. By freezing diesel and gasoline prices, Mexico forgoes potential fiscal gains from higher oil prices in order to stabilize inflation and domestic consumption. The IEPS mechanism effectively converts external windfalls into internal stability — a deliberate policy choice to prioritize macroeconomic control over revenue maximization. Mexico is thus neither a clear beneficiary nor a straightforward victim of oil price shocks. It occupies a hybrid position: structurally more insulated from supply disruptions, yet still constrained by global price formation and the fiscal trade-offs that come with it.
But longer-term structural questions remain. By suppressing fuel prices, the policy dampens investment signals in refining, storage, and logistics, delays the transition to cleaner energy, and reinforces reliance on fossil fuels. The partial integration achieved through Dos Bocas and Deer Park reduces supply vulnerability; it does not resolve the underlying efficiency gap or the fiscal dependency that turns each external shock into a budget event. Without a longer-term strategy addressing Pemex’s inefficiencies and Mexico’s continuing import dependence, the approach risks becoming a familiar cycle: short-term relief financed by longer-term vulnerability.
When Resilience Meets Reality: Dos Bocas and the Cost of Operational Risk
The March 17 fire at the Olmeca refinery in Dos Bocas, Tabasco, which left five people dead, comes at a sensitive moment for Mexico’s energy narrative. Just as the country’s refining strategy begins to strengthen supply resilience, the incident highlights a different constraint: operational risk is becoming more visible.
In immediate terms, the impact appears limited. The fire occurred outside core facilities, was contained quickly, and authorities report no damage to critical infrastructure. The refinery continues operating at around 60% capacity. But the relevance of the event lies elsewhere.
The preliminary cause — hydrocarbon residues combined with heavy rainfall — points to a structural challenge: managing environmental and operational risks in large-scale, still-stabilizing infrastructure. Olmeca, which only began producing at scale in 2024, remains in a ramp-up phase where incidents are more likely.
This matters because the refinery is not just an asset, it is central to the government’s strategy of reducing fuel import dependence. As that strategy advances, Mexico is not eliminating risk, but shifting it. Exposure to global supply shocks is being replaced by exposure to domestic execution.
Mayakan Pipeline Project Progress
The expansion of the Energía Mayakan gas pipeline in southeastern Mexico is progressing on schedule, led by Engie in partnership with the Federal Electricity Commission (CFE), with the first phase already completed, the second expected in early 2026, and full completion projected for the first half of 2027. The project involves the construction of a parallel 700-km pipeline, along with three compression stations and three measurement facilities, which together will more than double current gas supply capacity in the Yucatán Peninsula. Designed to deliver cleaner and more affordable energy based on natural gas, the initiative aims to support regional development and potentially extend access to states such as Chiapas, Campeche and Tabasco, while generating thousands of direct and indirect jobs during its construction phase.
Data Centres: Good for the Grid?
Mexico’s electricity demand is being quietly reshaped by the rapid expansion of data centres, according to Adriana Rivera, head of the Mexican Data Centre Association (MEXDC), who highlights how the digital economy is driving a more energy-intensive growth model. Data centres are transforming the system along three dimensions: demand scale, with projects requiring guaranteed and dedicated supply; geographic distribution, as capacity expands beyond Querétaro into new industrial hubs; and technical requirements, with 24/7 operations, cloud services and AI increasing the need for more reliable, scalable and cleaner energy solutions. Rather than competing with residential or SME consumption, these projects are built with dedicated infrastructure, positioning data centres not just as energy consumers, but as catalysts for investment, grid expansion and the broader energy transition — provided regulatory clarity and planning keep pace with demand.
In other energy news
— A column by journalist Peniley Ramírez exposed an anonymous complaint filed in 2024 raising the alarm about multimillion-dollar contracts awarded by Pemex without competitive bidding. One firm in particular went from minor operations to receiving significant contract awards through direct assignments justified on grounds of urgency. One such contract, worth more than US $100 million, was partially classified as confidential and advanced despite legislative challenges to its legality — challenges that resulted in a formal call for investigation that has so far gone unaddressed. The column also highlights that while many Pemex suppliers face payment delays, this company has received substantial and timely payments. Taken together, the picture points to structural problems of opacity, insufficient oversight, and possible discretionary conduct in the awarding of contracts within the state oil company.
— Two weeks after oil tar began reaching the coastline of southern Veracruz and northern Tabasco, at least 39 localities remain affected along roughly 230 kilometers of shoreline, with little clear information from authorities or oil companies. The government has attributed the spill to a private exploration vessel operating off the Tabasco coast and says the leak has been contained, but civil society organizations warn that the lack of transparency has worsened the socio-environmental emergency. Beyond the immediate economic damage to fishing and tourism, the spill threatens key ecosystems including mangroves, lagoons, and reefs, as well as years of community restoration work.
— Woodside Energy, in partnership with Pemex, has begun drilling the first well at the Trion field, marking the launch of Mexico’s first deepwater oil development. The program contemplates 24 subsea wells connected to a floating production unit with a peak capacity of nearly 100,000 barrels per day, with operations supported from ports in Tamaulipas and first production targeted for 2028. With Woodside holding a 60% stake and Pemex 40%, Trion is one of the country’s most significant offshore projects, expected to generate more than US $10 billion in taxes and royalties while strengthening energy security and local supply chains.
— A report published by Reforma describes how the construction of the Olmeca refinery has significantly altered daily life for residents of the Colonia Lázaro Cárdenas neighborhood in Paraíso, Tabasco. Residents report constant exposure to noise and fumes, with no clear information about long-term health impacts. Local families have requested the relocation of nearby schools following evacuation episodes and recurring ailments among students, and warn that the surrounding area is a high-risk zone with no emergency plans in place. The report documents the transformation of what was once a natural environment into an industrial complex, with falling property values and population outmigration as consequences. Specialists add that the absence of reliable, continuous environmental monitoring makes it difficult to accurately assess air quality in an area where industrial activity continues to intensify.
— Mexico’s Supreme Court (SCJN) ruled that the municipality of Cuatro Ciénegas, Coahuila, had overstepped its authority by charging annual operating license fees for energy facilities — including thermoelectric, solar, wind, and hydroelectric power plants — as well as for shale gas, natural gas, and hydrocarbon extraction sites. The court found that these fees encroached on the federal government’s exclusive jurisdiction over hydrocarbons and electricity, and struck down the relevant provision of the municipality’s 2025 revenue law. The practical takeaway for the energy sector is that companies, infrastructure operators, and project developers should audit the municipal tax arrangements in their jurisdictions to identify any fees that may be incompatible with this ruling.