OREANDA-NEWS. May 23, 2018. Shell is looking to roll out LNG trucking services to industrial customers across Mexico, providing an alternative to more polluting fossil fuels.

"We see huge potential because the network of natural gas pipelines is still in development," a senior executive at the company told Argus. "There are pockets where pipelines are not getting to, but LNG can get to."

The company is actively scoping the potential to truck LNG to an aggregated group of industrial clients around Durango, Monterrey, the Bajio and the Yucatan pensinsulas and Baja California Sur, where there is no access to natural gas via pipelines.

While fuel oil consumption has declined in the industrial and power sectors in recent years, in line with state-owned utility CFE's gradual transition to natural gas, diesel consumption has increased. Fuel oil consumption in the industrial sector dropped 42pc to 32.6 PJ between 2010 and 2016, while diesel consumption in industry increased 64pc to 83.2 PJ during the same period, according to the latest data from the energy ministry.

But despite an ambitious 8,000km natural gas pipeline build out set to conclude next year, there are many small pockets across the country that will remain unconnected to the national pipeline system.

"Allocating volumes is relatively easily done, but you need to find them, which is the difficult task," the executive said. "You need to find all of these unread books, which are mainly industrial companies out there burning expensive or inefficient fuels."

Mexico's natural gas needs are met primarily by US pipeline imports, with a small complement of LNG used for balancing purposes. But LNG imports have increased since April last year, following delays to the scheduled start of a series of new import pipelines and reduced flows in the Los Ramones Sur pipeline because of dust build up.

LNG imports averaged 713mn cf/d in February, up from the 502mn cf/d imported in February last year, according to the latest energy ministry data.

Mexico imported around 4.4 Bcf/d of pipeline natural gas in February, up 7.3pc year over year.

Mexico has three regasification terminals: the 0.7Bcf/d Altamira on the Gulf coast and the 1Bcf/d Costa Azul and 0.5Bcf/d Manzanillo on the Pacific coast.