Cenagas Awards Open Season Winners Ahead for Mexico’s Natural Gas Market – Spotlight

Mexico’s Cenagas, operator of the national pipeline system known as Sistrangas, has announced the winner of the largest open season under Andrés Manuel López Obrador.

The state-owned operator offered capacity to 19 end-users, distributors and shippers on the pipeline system, with almost all bidders receiving the required amount of uninterrupted capacity.

This was the second open season hosted by Cenagas during the administration of President López Obrador, and third overall since the founding of Cenagas in 2014. smaller process at 22.1 MMcf/d took place last year.

The biggest winner in pipeline capacity was the border link between the 48-inch Ramones pipeline in Mexico and the NET Mexico pipeline in Texas. Cenagas offered 230,894.47 GJ, or 210 MMcf/d, of capacity on the Ramones/NET Mexico interconnection.

Among the major winners of injected capacity at this point was Energía San Luis de La Paz SA de CV, a power plant in Guanajuato in the center of the country. It acquired 36,000,000 GJ/d of capacity to import from the border.

Petrochemical giant Braskem Idesa SAPI acquired 20,000,000 GJ/d at the same injection site.

Norberto Catalan of Navarrés Gas Natural said GPI Mexico by NGI that one of the surprises of the open season was the reserved distances. “Braskem is in zone 8 and has received flow to import gas from zone 3,” he said.

There are nine Cenagas rate zones divided between different geographic areas served by the pipeline system. Zone 3 is in the northeast bordering Texas, and zone 8 is in the southeast. Braskem Idesa’s operations are in Coatzacoalcos, Veracruz state.

Catalan added that another distinguishing feature of the open season was that natural gas traders could stake their claim on the national pipeline system.

Shell Trading Mexico S de RL de CV acquired 23,066,816 GJ/d, with injection at V032 Impcoral on the Kinder Morgan Border Pipeline. Macquarie Energy Mexico S de RL de CV has acquired capacity on many routes.

“My first impression is that it was an unexpected success,” said Mexican businessman Santiago Villareal GPI Mexico by NGI. “Cenagas allocated all the free capacity and the distribution companies and traders became the winners.”

You can find the full list of winners including daily capacity and routes click here.

Import from Mexico

U.S. gas imports continue to rise after slowing in December. Over the past 10 days, Mexico imported 6.40 Bcf/d of US pipeline gas, up 0.51 Bcf/d from the previous 10-day period.

“These numbers indicate a significant increase in gas demand,” NGI analyst Josiah Clinedinst said. “With a potential freeze in Texas next week, we could see a decline in exports to Mexico if the Texas pipeline network does not hold up infrastructure-wise.”

Wood Mackenzie analysts see another big year for US pipeline imports to Mexico.

Wood Mackenzie analyst Ricardo Fálcon said GPI Mexico by NGI that imports rose 2% in January compared to December. “Such a rebound is largely due to South Texas volumes serving Mexican pipelines, particularly through the NET Mexico Pipeline to Los Ramones.”

He said the number was partly due to “still weak Mexican dry gas output, which has barely crossed the 2.3-Bcf/d mark since July 2023.”

Falcon added that lower gas production in Mexico “along with an expected increase in new demand for natural gas is likely to contribute to massive imports into Mexico during 2024.”

NatGas prices

North American natural gas prices finally found momentum this winter amid cold weather and tightening supply levels. On Thursday, February futures on the New York Mercantile Exchange gained 5.8 cents on the day to settle at $3.097/MMBtu.

In Mexico on Wednesday, cash natural gas prices were at Los Ramones jumped 18.3 cents day/day to $3,190, according to NGI data. Monterrey through the Mier-Monterrey system rose 18.2 cents to $2,982. Tuxpan in Veracruz via Cenagas, the spot price rose 18.1 cents to $3,700.

On the West Guadalajara Natural gas rose 27.4 cents to $3,939 on Wednesday. Further north in El Encino, prices across the Tarahumara were $3.336, up 36.9 cents from the previous day. In the Yucatán Peninsula, the cash price is at Merida was $4,658 on Wednesday, up 17.8 cents.

Storage in the USA

The U.S. Energy Information Administration (EIA) announced a withdrawal of 140 Bcf on Thursday storage for the week ending January. 5. The result was an increase in prices.

The South Central region, near pipelines in Mexico, saw a 41 Bcf drop in natural gas supplies. This included 29 Bcf withdrawals from non-salt facilities and 12 Bcf salt withdrawals.

For the week ending January. 5, total working gas in the US South Central region was 1,160 Bcf, up from 1,063 Bcf in the same period a year ago. The figure was 107 Bcf higher than the five-year average of 1,053 Bcf, according to the EIA.

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