CFE Addresses Natural Gas Supply Challenges
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CFE Addresses Natural Gas Supply Challenges

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Perla Velasco By Perla Velasco | Journalist and Industry Analyst - Mon, 02/13/2023 - 15:11

The Board of Directors of CFE Internacional (CFEi) and CFEnergía met last week in a meeting spearheaded by Manuel Bartlett, General Director, CFE to present a new National Sovereignty and Security Model, aimed at ensuring the supply of natural gas to the country at competitive prices for CFE's electricity generation.

Miguel Reyes Hernández, General Director, CFEi and CFEnergía said CFEi’s 2022-2024 Business Plan prioritizes the supply of natural gas for power production due to the fuel’s environment-friendly, cost-effective and efficient characteristics.

Reyes announced that CFEi now uses 40% of the contracted natural gas transportation capacity compared to the 26% used during the previous administration. Moreover, he said that 75% of the natural gas supply is linked to unfavorable contracts signed at the time. “Through its trading, CFEi has acquired natural gas at better prices, while it has obtained extraordinary profits from the sale of natural gas into the US at the same time,” wrote the company.

CFEi reported it is conducting an investigation in Mexico and the US regarding various unfavorable contracts that affect the company’s operations and profitability. ”The previous administration created a company that would acquire, market and manage transportation assets on behalf of CFE, through contracts without bidding processes and with possible corruption and influence peddling. This resulted in [purchasing] excessive volumes of natural gas through intermediaries lacking experience or status in the industry. In addition, excessive transportation capacity was contracted in the US, in regions of little use to meet the needs of supplying natural gas to Mexico,” read the statement.

Reyes said that a solution to tackle the capacity surplus will be based on the priority of supplying natural gas for CFE's electricity generation, fertilizer plants, natural gas liquefaction and export plants and the private sector. Bartlett called for the strengthening of both subsidiaries to solve the problem he said was left by the previous administration.

Simultaneously, the CFEi council approved its 2022 Financial Statements, the 2023 Marketing Plan and an organizational structure update. Reyes highlighted CFEnergía’s beneficial contract renegotiations and reported the company saw a 5% year-on-year increase in gross profit in 2022. What is more, CFEnergía has invested more than MX$34 billion (US$1.83 billion) in strategic projects

Photo by:   Twitter @CFEmx

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