HOUSTON (ICIS)--Mexico’s state-run utility CFE is expected to require LNG through this summer, despite a major US-Mexico pipeline due to come online, according to market sources.
The submarine Sur de Texas-Tuxpan pipeline, an 800km (497 miles) pipeline stretching from Brownsville, Texas, to Tuxpan, Veracruz, is due to come online this quarter.
The 2.6 billion cubic feet (bcf)/day pipeline has been estimated to have a partial ramp-up through May but some sources said even a best-case scenario could see the pipeline run at 60% capacity by this summer.
This means that utility CFE would still likely require spot LNG, particularly as CFE uses the terminal Altamira as a balancing hub for any potential shortfalls in the country’s grid.
Declining production from Mexico’s state-run oil and gas producer Pemex are anticipated to further tighten the country’s gas supply.
One source estimated that CFE could require as much as one cargo a month into Altamira, but this was considered on the high side.
CFE has not secured any spot cargoes beyond February for Altamira and not any cargoes beyond March for its Manzanillo terminal.
According to LNG Edge, Altamira received one cargo in January 2019, a Shell-supplied cargo from Bonny. CFE received two Manzanillo cargoes in January, both sourced from Sabine Pass.
Manzanillo imported a total of about 139,000 tonnes in January, which was nearly 16% higher than January 2018. Altamira’s volumes, in contrast, were down nearly 18% compared with January 2018.
CFE is due to receive two February cargoes following one of its spot tenders. One cargo was delivered by trading company DXT Energy from Sabine Pass, while the other is expected to arrive again from Bonny, supplied by Shell.
Possible midterm tender Sources in the Americas said CFE could potentially issue a mid-term tender seeking supply between two and three years. CFE typically does not purchase more than a few months in advance. CFE had previously considered a strip tender in previous years but often the utility instead would just seek spot cargoes. CFE has purchased eight cargoes via tender for 2019 delivery, three cargoes for Altamira and five cargoes for Manzanillo.