The Japan-Mexico Energy Partnership: A turning point in Asia-Americas integration?

Executive Summary

This report analyzes the strategic Japan-Mexico energy partnership formed in April 2026 as a response to global supply disruptions caused by the partial closure of the Strait of Hormuz. The study explores Japan’s urgent need to diversify its energy sources and Mexico’s potential as a logistical hub for liquefied natural gas (LNG) exports to Asia. Based on publicly available data, the report evaluates the best-case scenario where Mexico successfully scales up gas production via fracking, Japan secures stable and cost-effective LNG supplies, and the U.S. supports this energy bridge as well as the worst-case scenario, where protests, technical failures, or U.S. restrictions derail the partnership, forcing Japan to remain dependent on Middle Eastern energy.

Background Information

Since the US-Israel-Iran conflict (February 28, 2026), Tehran has opted to partially close the Strait of Hormuz to pressure the global economy into ending the war. The Strait of Hormuz is a critical chokepoint: in 2024, 25% of global oil trade and 20% of Liquefied Natural Gas (LNG) trade passed through this route.

Figure 1 Sources: UNCTAD, EIA

Asian countries are the primary global destination for energy exports from the Persian Gulf, making them highly dependent on the Strait of Hormuz’s stability. In 2024, an estimated 83% of the crude oil and 83% of the LNG passing through the Strait were destined for Asian markets. Japan is one of the most import-reliant nations, meeting 97% of its total oil demand through external sources. 

Figure 2 Sources: EIA, Japan energy country profile

Analysis

Japan and Mexico reached a strategic understanding on energy on April 21, 2026, driven by the need to address severe global supply disruptions caused by the war in Iran. The partial closure of the Strait of Hormuz has prompted Japan to diversify its supply sources, making Mexico a key partnerin reducing the Middle East’s conflict risks. However, Mexico, with production of ~2 million barrels/day of oil and limited reserves (9 years of consumption at the current rate), is currently unable to cover Japanese demand. Moreover, Pemex produces 2.3 billion cubic feet of gas per day (Bcf/d) but depends on imports from the United States for 75-80% of its needs.

In spring 2026, to reduce this dependence, the Mexican government launched the “Estrategia para Fortalecer la Soberania Energetica”, aiming to reduce dependence on gas imports from the US. To achieve this goal, the Mexican government has opened up to the use of new technologies, such as fracking, for the extraction of oil and gas from unconventional fields.

• Target 2030: Pemex aims to achieve production of 4.049 billion cubic feet per day.
• Target 2036 (next 10-15 years): The target is to reach 8.6 billion cubic feet per day, an amount that would almost entirely cover current national needs.

However, President Sheinbaum herself admitted that it will take 10 to 15 years to develop the domestic production needed to eliminate dependence on US imports. Meanwhile, Mexico will serveas a strategic logistics hub for North American natural gas by transforming it into LNG for Asian markets.

• Export Terminals: The Fast LNG Altamira project began exporting LNG in August 2024. Other projects, such as Energía Costa Azul (on the Pacific coast), are under construction with the aim of liquefying gas imported from the US and shipping it directly to Asia.
• Gas Pipeline Network Expansion: The completion of infrastructure such as the Southeast Gateway Gas Pipeline (2025) and the expansion of corridors from Texas to western Mexico facilitate the flow of energy for export processing.

Mexico, due to its geographical location, can serve as a logistics hub for LNG to Asia, avoiding the Panama Canal. The agreement with Japan could turn Mexico from an importer into an exporter country and a strategic partner for Asian economies.

Figure 3 Source: EIA

Forecasting

Best case: Japan finds a stable and cheaper alternative for its energy supply than the Persian Gulf countries.

Key Assumptions

• Technological and industrial success in Mexico: The Mexican government reaches 50% of the gas production target (4.3 Bcf/d by 2030) thanks to the implementation of fracking.

Observable signal: Pemex publishes quarterly production data growing by 10% per year for 3 consecutive years.
What must not happen: No judicial bans or social protests blocking mining projects (e.g., Mexican Supreme Court rulings against fracking).

• Japan-Mexico Economic Alignment: Japan allocates direct investment to Mexico by 2028, focusing on: Expansion of LNG terminals on the Pacific coast, Development of alternative logistics corridors (e.g., railways for transporting LNG to ports).

Observable signal: Signing of at least 5 memorandums of understanding between Japanese companies and Pemex within 24 months.
What must not happen: No withdrawal of Japanese investments due to political or security instability in Mexico.

• US diplomatic support: Washington allows LNG exports from Mexico to Asia, seeing this as a way to tie allied countries such as Japan, Taiwan, and South Korea to its own energy system.

Observable signal: Joint US-Mexico-Japan declarations on energy flow complementarity.
What must not happen: No US sanctions on fracking technologies or funding in Mexico or cuts to US gas supplies to Mexico for political and economic reasons.

Impacts

Economic/industrial level

• Decline in logistics costs for LNG via shorter Mexican routes and lower insurance costs (1-2 years).
• Increased competitiveness of the most energy-intensive Japanese industries (3-5 years).
• Mexico becomes a key partner for Tokyo after Australia and Qatar (10+ years).

Diplomatic level

• Strengthening of ties between Japan and Latin America (1-2 years).
• Mexico acquires the status of energy hub for Asia (10+ years).

Internal/social level

• Environmental protests in Mexico over fracking (1-2 years).
• Increase in employment in Mexico due to the increase in jobs in the energy sector (3-5 years).

Strategies

• Japan:
  • Priority action: Invest in LNG storage infrastructure in Mexico to reduce logistics costs.
  • Effective Leverage: Offer advice to minimize the environmental impact of fracking.
  • Mistake to avoid: Depend exclusively on Mexico without further diversification.
• Mexico:
  • Priority action: Accelerate regulatory reforms to attract investment (e.g. simplifying licensing for LNG terminals).
  • Effective leverage: Using LNG revenues to finance social projects in extraction regions (e.g., Tabasco, Tamaulipas).
  • Mistake to avoid: Overstating production capacity and promising more to Asian partners.

Worst case: Japan’s failure in energy diversification and prolonged dependence on the Middle East

Key assumptions

• Mexico fails to become an energy hub for Asia: Protests by indigenous and environmental movements block fracking projects with lawsuits and demonstrations. 

Observable signal: Pemex announces reduced investment in fracking. 

What must not happen: No technological progress that makes fracking more efficient and sustainable.

• Mexican gas reserves prove to be lower than estimated: unconventional fields prove less productive than expected. 

Observable signal: Pemex reduces production targets and postpones LNG terminal designs.

What must not happen: No update of geological data regarding new unconventional deposits.

• The US blocks or limits gas exports to Mexico: Washington fears that Mexico’s autonomy in the energy sector will lead its southern neighbor to play a primary role in the Americas’ energy supply in the future, as previously done by Hugo Chavez and Nicolas Maduro’s Venezuela, threatening a strategic area for US interests.

Observable signal: Enactment of energy supply agreements between Mexico and Caribbean states. 

What Must Not Happen: U.S.-Mexico agreements on areas of influence.

Impacts

Economic level

• Japan is forced to continue importing oil and LNG from the Middle East.
• Collapse of LNG infrastructure investment in Mexico that reduces Mexico’s liquefaction capacity and energy strategic autonomy.

Diplomatic level

• Japan is forced to strengthen ties with the Gulf countries to ensure stable supplies but on less favorable terms in the absence of alternatives.
• Diplomatic tensions between Japan and the United States due to the blockade on Mexican infrastructure.

Strategies

Japan

• Increase investments in alternative energy sources such as nuclear, green hydrogen, and renewables to reduce dependence on fossil fuel imports.
• Enter into agreements with Canada (the world’s fourth-largest oil and gas producer with oil reserves for 189 years and gas reserves for 18). Canada is working to expand its LNG export capacity, especially to Asian markets. 
• Increase the shares of LNG imported from Australia.

Conclusion