Mexico’s second auction for natural gas transportation capacity held in the United States by its state-owned energy companies closed on 10 July without an award, round organiser and transmission system operator CENAGAS announced that same day.
The round offered 2.1 billion cubic feet (bcf), or 60 million cubic metres/day, of pipeline capacity belonging to CFE International - the US-based fuels trading arm of Mexico’s state power utility CFE - in five different pipelines linking gas hubs in the southern US to the border.
Although companies expressed interest in participating in the round, CENAGAS said in a statement, not one bid was received on the electronic board set up to administer the round.
CFE International plans to make the exact same capacity allocations available in the next auction organised by CENAGAS, which is planned for 10 August, and will offer annual contracts beginning 1 September 2017.
Mexico’s state oil company Pemex can also use the electronic auction process to market its capacity in pipelines connecting US hubs to the border, offering capacity on a daily, monthly or annual basis.
The lack of interest was not a surprise to market participants, who warned prior to the day of the auction that the capacity available would be of limited use to the Mexican gas market.
Only one of the five pipelines in which capacity was offered through the auction actually connects to the Sistrangas network, in which over 20 different marketers and industrial consumers hold pipeline capacity.
That same pipeline - the El Paso Natural Gas system at its interconnect with the Gasoductos de Chihuahua pipeline in northern Mexico - was also the lowest source of potential capacity, with just 16,497 dekatherms (Dth) per day – 16 million cubic feet/day - made available.
The rest of the four pipelines offered in the auction connects to new infrastructure under construction in the west of country, which is separate from the Sistrangas and designed to service CFE power plants and emerging industrial demand.
However, demand on these new pipelines is expected to remain constrained through much of the next 12 months due to the slow ramp-up of new power plants and the construction of associated distribution infrastructure in the region.
Prior to the launch of the auction, Mexico’s industrial association CONCAMIN issued a statement rejecting the auction process, which it labelled insufficient.
“[The capacity] in these pipelines is connected to points that impede the delivery of a sufficient volume of gas to the majority of the country,” CONCAMIN President Manuel Herrera Vegas said in the 6 July statement.
The statement added that a further auction for capacity owned by Pemex in the US should be held, much like the first such round held in February this year.
The Mexican subsidiary of UK-based energy company BP secured 200,000Dth/per day of capacity on the NET Mexico pipeline which connects to the Los Ramones pipeline, part of the wider Sistrangas grid. Two Mexico industrial consumers, Vitro and FEVISA, secured just under 21,000Dth/day combined in the same round. firstname.lastname@example.org