Mexico's CFE evaluating transfer of natural gas pipelines to Cenagas: sources
By Daniel Rodriguez / Platts
Petroleumworld 02 11 2019
Mexico state utility CFE is evaluating the transfer of its control of capacity across several new natural gas pipelines to state gas system operator Cenagas, relinquishing a dominant market position and creating an integrated gas pipeline network, according to sources close to the situation.
CFE's administrative council has made this plan a priority in order to decrease its financial exposure, the sources said. And Cenagas is evaluating how to integrate the CFE pipelines into its network, they said.
"This could mean the end of CFE's pipeline strategy and the emergence of CFEnergia as the great player in Mexico's gas marketing space," one source said.
The utility currently markets over half of the Mexico's gas demand, about 3.4 Bcf/d. It also controls more than 7,800 km of pipelines either operating or under construction, including several key pipelines feeding Mexico. These include TransCanada's 2.6 Bcf/d Sur de Texas-Tuxpan underwater pipeline and Fermaca's Wahalajara corridor, both expected in service this year
If done following open access rules, the acquisition by Cenagas of CFE's pipelines will give a significant boost to Mexico's gas sector and market liberalization, sources said.
Sharing the cost of these pipelinesand granting open access across all users in Mexico under Cenagas' control could be smart energy policy toward market liberalization, a second source said.
CFE declined to comment to Platts on Thursday. A spokesman said the utility's CEO, Manuel Bartlett, will announce its gas strategy as part of its National Electric Plan next week, along with Mexican President Andres Manuel Lopez Obrador.
Cenagas did not respond to comment requests from Platts.
The new administration of CFE, led by Bartlett since December 1, when the Lopez Obrador administration was installed, does not want to continue paying billions of dollars in fixed demand charges for the remaining duration of its pipeline capacity contracts, according to the third source.
It is a concern that CFE has subscribed to several new pipelines running far below capacity or whose future is uncertain, according to S&P Global Platts Analytics.
The utility-anchored pipelines in Northwest Mexico are running at lower utilization rates and could remain underutilized until LNG export capacity is installed or downstream markets mature, according to Platts Analytics.
Another concern is that CFE is making fixed capacity payments on suspended pipelines due to social and permitting challenges, according to Platts Analytics, such as TransCanada's Tuxpan-Tula and Tula-Villa de Reyes pipelines, which have no official start date established.
Sources said it was still unclear what the future of the utility's gas marketing arm, CFEnergia, will be. The second source said that CFE could maintain the division to secure supply via gas supply contracts. Another option being considered is CFE procuring its gas needs through state oil company Pemex, the third source said.
If the CFE pipeline capacity is integrated with the Cenagas system in a manner similar to how Pemex's network was integrated, the result could greatly benefit Mexico, the second source said.
Exactly how the CFE gas transmission assets would be integrated with Cenagas is yet to be determined, according to the first source.
"They are clear of what they want to do but not on how to do it," he added.
The transfer might not happen at all because of its complexity, the first source said, adding that such a move would create "nervousness in the market."
Pipelines operators potentially affected by a change -- Fermaca, IEnova and TransCanada -- did not respond to requests for comment from Platts by press time.
We invite you to join us as a sponsor.
Circulated Videos, Articles, Opinions and Reports which carry your name and brand are used to target Entrepreneurs through our site, promoting your organization’s services. The opportunity is to insert in our stories pages short attention-grabbing videos, or to publish your own feature stories.
Story by Daniel Rodriguez; Edited by Richard Rubin from Platts / SPGlobal.
spglobal.com 02 08 2019
Hit your target - Advertise with us
PW 300.000 plus request per week
Copyright© 1999-2019 Petroleumworld or respective author or news agency. All rights reserved.
We welcome the use of Petroleumworld™ (PW) stories by anyone provided it mentions Petroleumworld.com as the source.
Other stories you have to get authorization by its authors. Internet web links to http://www.petroleumworld.com are appreciated.
Petroleumworld welcomes your feedback and comments, share your thoughts on this article, your feedback is important to us!
We invite all our readers to share with us
their views and comments about this article.
Write to firstname.lastname@example.org
By using this link, you agree to allow PW
to publish your comments on our letters page.
Any question or suggestions,
please write to: email@example.com
Best Viewed with IE 5.01+ Windows NT 4.0, '95,
'98,ME,XP, Vista, Windows 7,8,10 +/ 800x600 pixels