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Analysis

CNG as an Alternative to Pipelines

Wed, 01/21/2015 - 10:40

In the newly opened Mexican market, expectations are high for Grupo Diavaz as a major national oil and gas company. In addition to having enough experience to become an independent operator, Grupo Diavaz also owns Compañía Mexicana de Gas, a natural gas distribution leader headquartered in Nuevo Leon. “This company pioneered natural gas distribution in Monterrey back in 1930,” recounts Luis Vázquez Sentíes, President of Grupo Diavaz. “Because of this endeavor, this important hub underwent a rapid industrialization process and became a leading player in Mexico’s development.” Compañía Mexicana de Gas began on the right foot with Cervecería Cuauhtemoc becoming its first customer. The gas company then quickly stepped up to serve other important clients in the Monterrey area.

Recent natural gas transportation infrastructure developments proposed by the Mexican government are essential for the country in order to spark the creation of new industries. This encouraged Compañía Mexicana de Gas to participate in the gasification of the country, with the company now looking for ways to get involved in pipeline developments. Another important business line is related to compressed natural gas (CNG), where the company focuses on delivering natural gas by truck to places that lack pipeline infrastructure. Vázquez Sentíes expects this service to boom in the near future. The virtual pipelines enable companies to test the demand in a given region in order to evaluate if it would be a profitable venture to build a pipeline instead of trucking natural gas. “With this in mind, we see a great window of opportunity in Mexico because we could combine our capabilities to transport CNG in order to lay the foundation for Compañía Mexicana de Gas to begin participating in pipeline developments,” shares Vázquez Sentíes. He stressed that even though both the pipeline development and virtual pipelines business lines are very important for his firm, he would like to keep their operations separate. “In the future, we might well take on a more integrated approach, but at the moment we would like each business line to focus on what it does best.”