Carlos Arriola
Director General
Iagasamex
/
Insight

Capitalizing on Inconsistency in the Natural Gas Supply

Wed, 02/19/2014 - 15:10

Mexico’s increased focus on natural gas has provided the opportunity for companies to pounce on the current lack of infrastructure by linking up markets that have so far not been able to access natural gas. Companies like Igasamex, that design, build and operate gas pipelines, have been closely watching these developments. “One particular issue that we face is the inconsistency of gas supply; the system is currently over-stretched and is operating above capacity, which has created reliability issues,” says Carlos Arriola Jiménez, Director General of Igasamex. His firm focuses on providing more reliable services to end users by finding long-term solutions to the natural gas network’s thornier problems, to increase the competitiveness of high CAPEX industries by making their operation more efficient and cost competitive.

Today, Igasamex is delivering natural gas via pipeline only but is looking to expand into serving off-grid customers with compressed or liquefied natural gas transported by truck. This expansion is targeting markets that are inaccessible via pipeline due to their isolated locations or to their distance from existing infrastructure, thereby contributing to the coverage of natural gas in Mexico through continuous investments. “Igasamex focuses more on industrial users. The power generation sector has traditionally been outside our scope, since it requires a much higher level of investment,” says Arriola Jiménez. “This sector also has needs that are different from those of the market that we serve,” he adds.

Inconsistencies within the system and the state of overcapacity in the sector are the main challenges that need to be overcome. Natural gas transportation companies are working hard to guarantee natural gas supply to their customers. However, in order to keep offering reliable services, several additional strategies are being adopted. “We ensure that all of our pipelines and every investment we make are in line with international and national norms,” says Arriola Jiménez. Everything must be tested before a project starts operating to ensure that there will be no problems related to the supplied parts in the construction of the pipeline, which can affect reliability. Igasamex has also developed backup systems for customers that cannot afford to have an interrupted supply. “PEMEX has been making a big effort to expand the flow of natural gas and LNG shipments, which is not the most economical solution but is the right one at the moment,” Arriola Jiménez says. “Developing infrastructure can significantly improve the reliability of the overall system, but this involves long timeframes.”

Natural gas transportation companies take on the role of enablers in the transition to natural gas. Offering natural gas services in Mexico is complex, particularly in areas that are not part of the pipeline network’s distribution zones. The challenges stretch across permitting, acquisition and the marketing of natural gas. “Our key strengths come from the deep and keen understanding we have of the market and regulatory framework, as well as the operational challenges that come with developing energy infrastructure in Mexico,” says Arriola Jiménez. Even though Igasamex is still not relying on LNG-specific operations, it is seeking strategic partnerships that will ensure safety, quality and reliability in such projects, allowing them to take advantage of the opportunities created by natural gas supply inconsistencies. The reliability that Igasamex itself offers can be noted in the continuity of their services since the Mexican transportation market for natural gas was opened 17 years ago. “This is a business in which we tend to contractually commit to long-term relationships. For the most part, the great majority of those partnerships have turned out to be very successful with a tremendous amount of value being created for the parties involved,” comments Arriola Jiménez

“Many multinationals that have set up operations in Mexico have put their trust in Igasamex and we feel proud that we are doing our small part to contribute to the development of our country,” Arriola Jiménez says. “The companies that are deciding where to locate their manufacturing facilities should know that entities like Igasamex can help to ensure easy access to adequate services,” concludes Arriola Jiménez. “Intensive energy consumers should look at Mexico as an investment option, as the country can provide competitive advantages to companies.”