Mexico’s Pemex loses 30% of gas market share since July

Over 30% of Mexican natural gas consumers previously supplied by state oil company Pemex have moved to supply contracts with other wholesalers since the start of the country’s new gas market in July this year, Mexico’s energy regulator CRE announced on 26 September.

The regulator revealed that contracts totalling 1.14 billion cubic feet (bcf) per day of the state oil company’s original 3.56bcf/day client base have selected an alternative supplier to Pemex.

The majority of those choosing to switch were companies selected to participate in the second and third phases of the Pemex contract release programme (PCC), a process through which 70% of the state company’s supply contracts were made available for other marketers to bid upon.

After selecting an initial 30% tranche of Pemex customers not to be included in the PCC, CRE divided the remaining 70% of the company’s supply contracts in to three separate groupings.

The initial 20% were then offered through the first phase of the PCC, held between January and April of this year. The remaining 50% of contracts were then to be offered in phases II (20%) and III (30%), initially planned to be held over late 2017 and the first half of 2018, respectively.

PCC

Roughly 53% of the just under 1.7bcf/day in supply contracts selected for phases II and III had already moved to a new supplier as of September, according to the CRE results.

By comparison, just under a fifth of the 758 million cubic feet (mcf) per day in total contract volumes offered through the first PCC phase opted to move away from Pemex.

Sources put the difference in uptake rates due to the timing of each phase in relation to the first open season for capacity in the Sistrangas national transport grid organised by system operator CENAGAS.

Those selected to participate in the PCC phase I were to have made a decision on moving to a new supplier by the end of the April, while the results of the CENAGAS open season were not announced until early May.

Those consumers opting to break from Pemex in phase I, therefore, had to take a gamble on being able to secure capacity in the open season, either in their own name or that of their chosen supplier.

“Seems more likely that being in phase 1 forced you to make your decision early, which pushed people to Pemex,” one source said.

In addition to those companies selected to participate in the PCC, around 7% (82mcf/day) of the 30% of Pemex clients not made available for public bids chose to move to another supplier.

Breakdown

Just over half (600mcf/day) of the 1.1bcf/day of contracts moving to a new supplier were located in the Gulf zone of the Sistrangas, which covers clients from the US-Mexico border down to the La Venta compression station in Tabasco and includes major demand centres along the Gulf coast, as well as the city of Monterrey.

Roughly half of the remaining 500mcf/day in contracted volume was located in the central zone, which includes Mexico City, with a further 150mcf/day in volume located in the western zone, which includes clients in the Bajio region. The remaining contracts were split between the north (Chihuahua state) and South (Tabasco and the Yucatan) zones.

By business sector, power generators were the largest group to move away from Pemex, representing roughly 72% (790mcf/day) of all the contracts moving to new suppliers, followed by industrial and local distribution companies.

A breakdown on how many of these generators selected CFEnergia, the fuel trading arm of Mexico’s state power utility CFE, could not be established prior to publication.

CFEnergia was known to have secured several supply contracts with generators, as well as a 160mcf/day supply deal with industrial group Arcelor Mittal. However, other marketers active in Mexico such as BP and Macquarie were also heard to have secured supply contracts with participants in the power sector.

Going forward, CRE is now likely to dispense with the idea of having two more PCC rounds, and will instead combine the 783mcf/day in contracts remaining with Pemex from phase II and III in one round.

This round will likely be launched in the first quarter of 2018, timed to coincide with the next open season for capacity in the Sistrangas natural gas transmission network organised by system operator CENAGAS.

Existing capacity reservation contracts signed through the first open season end on 30 June 2018. Unlike in the first open season, companies looking to participate in the second round will have more flexibility over the length of the capacity reservation contract. james.fowler@icis.com