Mexico's Flared Gas Can Become Revenue Stream, Experts Say

Every year, Mexico's oil fields release enough natural gas into the atmosphere to supply a midsized industrial city. According to PEMEX's second-quarter 2026 disclosures, the country flared and vented an average of 778 million cubic feet per day (MMcf/d), around one-fifth of total gas production.

Reducing flaring is a huge technical and financial challenge for PEMEX, which has aging infrastructure and is financially constrained. However, by framing this problem as an underused national asset, the Ministry of Finance and Public Credit (SHCP) and Ministry of Energy (SENER) could convert this wasted gas into revenue, jobs, and cleaner air without requiring public investment.

Several oil-producing countries have made real progress on reducing flaring and methane. Two models have emerged: a regulatory model that relies on binding mandates enforced with penalties, which works but is capital-intensive; and an incentive-based path that changes the economics so capturing gas becomes more profitable than burning it.

The United States and Argentina offer examples of successful reducers that have taken the second approach. Texas's House Bill 591 (2023) exempts operators from severance tax on captured gas, while Argentina's 2024 RIGI investment regime has pulled billions into Vaca Muerta's shale gas fields by offering reduced corporate tax and exemptions from new taxes.

By adjusting the price of natural gas for volumes that would otherwise be flared, paired with a transparent access mechanism, SHCP could incentivize private investors to build small and mid-scale capture infrastructure. At current rates, half of what is currently flared and vented could be easily captured, generating roughly US$150 million per year in new fiscal revenue.