Mexico’s CENAGAS opens bidding for balancing gas supply

Deadline to submit bids is 31 December

Only traders holding permits from CRE allowed to participate

Services requirements depend on Sistrangas balancing needs

MEXICO CITY (ICIS)–Mexico’s natural gas transmission system operator (TSO) CENAGAS has opened a bidding process to supply gas that would maintain the balance of the national Sistrangas gas grid.

The services would be provided on a contingency basis, which means that CENAGAS would request supply as required by the operating conditions of the Sistrangas.

The contract would be valid from 1 February to 31 December 2020, with the option to extend its term automatically on a yearly basis each time it expires. Both parties would have the ability to terminate the contract early by giving a 30-day notice.

The process is open to traders holding permits from energy regulator CRE to sell natural gas, who also have import authorization from Mexico’s tax authority SAT.

The deadline to submit bids is 31 December, with the selected winner or winners expected to be announced on 15 January 2020.

Requirements

Bids must include a proposal letter and detail the reference price index that would be used to assess gas prices as well as the maximum guaranteed volumes to be supplied to each of the receipt points, which are to be proposed by the bidder from a list provided by CENAGAS in the bidding documents. The reference price should be quoted in Mexican pesos, with the proposal noting the applicable exchange rate that would be used to calculate the effective price.

The proposal must also include the producing area from which the gas would be supplied and the potential transport routes that would be used.

The selected bidder will be the only one responsible for transporting the gas to the receipt points, as well as for managing inventories and meeting all the requirements needed to buy and import natural gas.

Bidders must have reserved capacity on upstream pipelines valid at least through 31 December 2020.

Transparency attempts

As the operator of Sistrangas, CENAGAS is tasked with overseeing the operational balance of the system to ensure continuity and security of gas supply through key parts of Mexico.

Recent developments, such as the October approval of a controversial gas balancing rules exception, had led some market participants to ask for greater transparency regarding balancing procedures.

CENAGAS’ new bidding process does not address their concerns, but it does seem to open to the door to greater potential transparency and collaboration with market participants who have previously advised the TSO of the advantages of the bidding process it has just opened.