The natural gas industry in Mexico
What import dependence costs a Mexican plant
According to SENER, Mexico's natural gas imports went from just 4% of consumption in 1998 to more than 60% by 2017. That single line explains most of what an industrial gas buyer in Mexico deals with: a delivered price set on US benchmarks, a transport system that was built north to south faster than it was built into the interior, and a supply chain whose weakest link is a pipeline, not a wellhead.
The nearest checkable anchor is SENER's own Prospectiva de Gas Natural 2017-2031, which records national demand of 7,618.63 million cubic feet per day (MMpcd) in 2016 against imports of 4,168.1 MMpcd, so imports covered 54.7% of consumption that year. 87.2% of those imports arrived by pipeline rather than as liquefied natural gas.
For a plant director or CFO, this matters in three specific places: the price index your gas contract references, whether your transport is firm or interruptible, and whether your site sits on a pipeline with spare capacity. Those are the variables you control. National import share is not.
Who actually controls the gas that reaches your meter
Three institutions decide, and industrial buyers regularly write to the wrong one. CENAGAS, the Centro Nacional de Control del Gas Natural, is the independent manager and operator of SISTRANGAS, the integrated national natural gas transport and storage system. CENAGAS allocates capacity on that system and issues the operational restrictions that determine who gets curtailed when the network cannot balance. CRE, the Comisión Reguladora de Energía, issues the transport and storage permits, approves the tariffs, and approves the terms of service that govern how capacity is sold. Pemex remains a producer and processor. It is not the system operator.
Capacity on the regulated systems is allocated through a temporada abierta, an open season conducted under the permit holder's CRE-approved terms of service. Transport and distribution by pipeline are subject to open access on terms that are not unduly discriminatory, and permits run for up to thirty years from the date they are granted. All three provisions sit in the Reglamento de las actividades a que se refiere el Título Tercero de la Ley de Hidrocarburos (DOF, 31 October 2014), Articles 10, 11 and 74.
The practical consequence is that a plant which misses an open season waits for the next one or buys released capacity from a shipper who did not miss it. Capacity rights are an asset. Most industrial buyers in Mexico treat them as a line item in a marketer's quote and never ask who holds them.
The price you should be testing your quote against
CRE publishes a monthly wholesale reference index, the Índice de Referencia Nacional de Precios de Gas Natural al Mayoreo (IPGN), in US dollars per million British thermal units. It is built from reported day-ahead spot transactions, including volume, price, storage cost and transport cost, and CRE publishes it within 15 business days of month end. The first index, covering July 2017, put the average marketer sale price at USD 4.10 per MMBtu (EIA, Today in Energy, 30 August 2017).
That index is the cheapest diligence available to a Mexican industrial buyer. A delivered quote decomposes into a commodity reference, a transport charge and a marketer margin. If your quote carries a delivered price and no decomposition, you cannot tell which of the three is moving when the number changes, and you cannot tell whether the transport charge you are paying corresponds to firm service or to interruptible service you have been billed as though it were firm.
Pipelines reach the north before they reach the interior
Most of the cheaper piped gas from the United States has historically landed in the northern states, which is where the export corridors terminate. Central and western Mexico leaned on liquefied natural gas delivered to the Manzanillo terminal, which is a more expensive molecule for the same heat. Closing that gap has been the point of the pipeline build-out through 2019.
The Sur de Texas to Tuxpan marine pipeline achieved commercial operation on 17 September 2019. It runs 772 kilometers with a capacity of 2.6 billion cubic feet per day and is operated by Infraestructura Marina del Golfo, a joint venture of TC Energy and IEnova (IEnova press release, 17 September 2019). That line moves US gas directly to the Gulf coast of Veracruz rather than routing it overland through the northeast.
Inland lines were suspended between 2018 and 2019 while contracts were renegotiated, and some resumed. For a facility making a fuel decision now, the question is not whether the national network eventually fills in. It is whether the specific lateral serving your municipality has contracted capacity available in the next open season, and what the interim delivered cost looks like if it does not.
Terms to establish in the gas contract
- The index your contract references, the publication date it settles against, and whether transport is bundled into the delivered price or billed separately.
- Whether the transport behind your supply is firm or interruptible, and whether the capacity is held by your plant or by your marketer.
- The curtailment order and notice period in the supply agreement, and whether the supplier's delivery obligation survives a CENAGAS restriction.
- Your cost per hour of a gas interruption, measured as replacement fuel cost plus the gross margin on production you cannot cover. This is the number that tells you what firm transport is worth.
- Whether an upcoming temporada abierta on your serving system gives you a route to hold capacity directly instead of renting it.
A site that can produce those five answers is in a position to negotiate. A site that cannot is accepting whatever risk allocation its marketer wrote. The gap between the two is usually worth more than the commodity spread both parties are arguing about, particularly for facilities where an unplanned shutdown costs more per hour than a month of reservation charges. The same logic applies to electricity, where the equivalent questions concern exposure to gas-fired dispatch and to the absence of gas storage in Mexico.
Review your gas contract before it renews
Mexico Energy Partners provides regulatory and commercial advisory support on natural gas supply and transport in Mexico, including capacity arrangements, open season participation and contract review. We are advisors, not a law firm, and we work alongside your Mexican counsel where a legal opinion is required. An initial review needs twelve months of gas billing, the current supply and transport contracts, and the site's hourly consumption profile. Related work for industrial sites is described under industrials and logistics and regulatory and policy advisory.