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Mexico: first natural gas pipeline open season

Published by
World Pipelines,

As part of a series of ongoing energy reforms, Mexico’s National Centre for Natural Gas Control (CENAGAS) recently conducted the first open season to auction capacity rights on the country’s natural gas pipeline grid.

CENAGAS manages Mexico’s Integrated National Natural Gas Transportation and Storage System, also known as SISTRANGAS, which currently has 6256 miles of pipeline and a total transportation capacity of 6.3 billion ft3/d.

CENAGAS was created in 2014 as the public entity entrusted with assigning capacity rights for pipelines that were previously owned, operated, and largely used by Mexico’s national energy company, Petróleos Mexico (PEMEX). Before 2014, PEMEX was the monopoly owner of Mexico’s pipeline assets. Mexico’s energy reforms have provided a process to transition Mexico’s energy sector to competitive markets that are open to both foreign and domestic companies.

To transition to the new market structure, two open seasons were scheduled to auction pipeline capacity rights. The first phase (Round 0) was for reallocating Mexican resources; it was not open to foreign companies. During Round 0, 4.1 billion ft3/d of the total 6.3 billion ft3/d capacity was allocated, with 1.1 billion ft3/d reserved for Mexico’s Federal Electricity Commission, 1.4 billion ft3/d reserved for PEMEX, and 1.6 billion ft3/d reserved for Mexico’s independent power producers.

About 2.2 billion ft3/d of capacity remained for the second phase (Round 1) auction, conducted in May 2017, which was open to both domestic and foreign companies. Data available on the CENAGAS website show that 24 local and international companies requested capacity rights totalling 3.6 billion ft3/d in Round 1, much more than the 2.2 billion ft3/d available. An additional 1.3 billion ft3/d, more than half of the remaining available capacity in Round 1, was awarded to PEMEX. The next-largest shares of the Round 1 auction went to ENGIE Mexico and ArcelorMittal, each getting 7% of the Round 1 allocation, and to Shell Trading Mexico and Grupo Alpha, which acquired 6% and 5%, respectively. The remaining 15% went to 19 other companies. Many of the companies that were awarded capacity rights are in the natural gas retailing and marketing business, although the list also includes industrial customers such as steel and cement companies.

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