Ricardo Ortíz
Director of the Energy & Natural Gas Division
Grupo Diavaz

Liberalization Leads to Opportunities

Wed, 02/22/2017 - 12:36

The liberalization of Mexico’s natural gas market is creating ample business opportunities for energy enterprises while providing an array of benefits for clients, says Ricardo Ortíz, Director of the Energy and Natural Gas Division at Grupo Diavaz. “The liberalization of the market will enable our clients to access natural gas under better conditions, in a competitive environment with clear rules.”

The country’s second largest oil producer and the winner of the Barcodón and Catedral gas fields, Diavaz is now expanding its natural gas business through a new trading subsidiary, complementing its participation as distributor and operator. “The liberalization of the market implies that PEMEX will no longer be the only natural gas supplier in Mexico, which is bringing new players to the game,” adds Ortíz. “Diavaz has taken advantage of this opportunity, opening a subsidiary for natural gas trading called Diavaz Gas Com.

“Through aggregation of volume from our clients, Diavaz Gas Com will achieve better buying conditions for the imported and national gas molecule. Additional benefits include the transportation capacities of pipelines, which are either privately owned or from CENAGAS,” he says. Diavaz Gas Com is looking to offer firm services but is waiting for CENAGAS to finalize regulatory processes before defining its permanent strategy. “CENAGAS will first assign capacity reserves to CFE and PEMEX. Secondly, it will formalize the capacity reserves of end users and distributors already connected to the national pipeline system, which have acquired rights. Finally, CENAGAS will have an open market in which companies can buy and sell capacity reserves according to their marketing needs,” Ortíz says.

Ortíz expects the new natural gas sales regime to be working by early 2017, including the removal of firsthand prices in the north. The market’s liberalization is likely to attract new trading companies and drive prices down. “We know that other trading companies are also preparing for the market’s opening, visiting prospective clients, asking for the necessary permits and defining trading strategies."

On the distribution side, Grupo Diavaz unit Compañía Mexicana de Gas has put in place a five-year business plan, authorized by CRE, that estimates 195,000 connected clients in the company’s home base of Monterrey by 2019. “Most of the investments are focused on extending the distribution network and increasing the scope of the service,” Ortíz says. Safe processes in the facilities and continuity of service are pillars of the model. “The reading, billing and payment processes are recognized by the ISO-9000-2015 system, which assures the quality and continuous improvement in the delivery of the service.”

Despite the planned expansion of the country’s pipeline system, Ortíz says it will not be enough to meet the nation’s needs. Another subsidiary, Neomexicana, is dedicated to virtual pipelines to various locations and Ortíz expects that to continue. “We still foresee demand for natural gas on wheels in the medium term,” he says.