CFE Plans Auction to Sell Excess Natural Gas Capacity

CFE aims to develop a secondary market by preparing to hold auctions in the US and Mexico to sell its excess natural gas capacity. With the bid, CFE hopes to improve its overall profit margins.

The US-based private commercial arm of the state electricity company, CFE International, and CFEnergía said they will announce a plan for an auction that contributes to the development of a secondary natural gas secondary market. The company looks for private sector offtakers in both countries.

“We wanted to announce this auction for natural gas capacity to members of the US and Mexico private sectors so that they are aware of this option in case of possible interest for their industries in the short term,” said Miguel Reyes, CEO, CFE International. “The auction is going to be in real-time for all who want to participate in the US and Mexico. Our excess gas will be assigned to the winners that offered CFE the best bid,” he added. 

Reyes explained that because of the many long-term contracts signed during the previous administration, CFE has more natural gas than it needs to supply its power and fertilizer plants, clients or that it could use for new projects. 

Capacity will be made available at specific delivery points and hubs where companies can bid on the quantities they need to supply their operations.

According to Reyes, the auction will create a dynamic in which the company will benefit from selling its excess capacity and the energy and industrial sectors will benefit from access to natural gas at a discounted rate. The development of a secondary natural gas market would also be a boon.

CFE has been actively seeking out partnerships and investment opportunities with members of the private energy and industrial sectors in both the US and Mexico. In the past 18 months, the company has increased its sales figures and enhanced its relationships with the private sector.

The announcement of the planned auction was received positively by members of the natural gas industry who consider it an important development opportunity for CFE. Eduardo Buelna, Director, BP’s North American natural gas trading affiliate, described the plans as "very good for the entire industry." He added that the development of a secondary market is exciting and that the industry is always keeping an eye on market offerings to identify where demand exists.