SENER Seeks to Remedy CFE’s Excess Gas Capacity

The Mexican Ministry of Energy (SENER) has urged natural gas pipeline operator CENAGAS and CRE to implement new criteria to favor the contracting of natural gas transportation from CFE, as the state company pays for significant natural gas capacity that it does not utilize. The move would grant priority to the gas transportation service to companies that signed contracts with CFE or any of its subsidiaries over those with private contracts.

According to SENER, CFE must now comply with contractual obligations that represent 21MMcf/d of natural gas due to bad planning of past administrations. The state utility works through its subsidiary CFE International, which functions as a natural gas transportation service in the US. CFE contracted services to import about 8.2MMcf/d and uses only 3.5MMcf/d, or 40 percent of the contracted capacity. Whitin in Mexico, CFE holds natural gas transportation service contracts of 18MMcf/d, though only 68 percent of this capacity is used.

“The contracted transportation in the US is equivalent to 4 times the maximum daily demand of CFE power plants supplied with natural gas, and 3.4 times in Mexico,” clarified Minister of Energy Rocío Nahle.

Therefore, SENER requested CENAGAS that the users or those interested in receiving the transportation service prove, within a period of 60 days, that the supply of natural gas is received by one of the productive companies of CFE or its subsidiaries. “This will reduce the impact on Mexico’s finances due to the underutilization of the capacity contracted by CFE in the medium and long term and contributes to guaranteeing the supply of natural gas in national territory,” said SENER.

The Mexican Institute for Competitiveness (IMCO) said that if CFE is the only buyer of natural gas abroad and the only marketer in Mexico, the competitiveness of the country would be reduced and CFE’s operational risks would increase significantly as Mexico’s sole supplier. In 2021, Mexico consumed 8.3Bcf/d, according to Forbes. National production stood at 2.3Bcf, , only 28 percent of the total demand. SENER has acknowledged that Mexico’s natural gas consumption is highly dependent on US imports.

"The imposition of CFE as a supplier violates principles that are in the law. Open access. Separation of activities. The promotion of markets. Concentrating the intermediation in a single agent goes against energy security," tweeted CENAGAS’ former Head of Planning, Eduardo Prud'homme.