CFEnergia will launch an online natural gas trading platform by the end of February
The platform will be used "by at least the six generating companies which consume about 3.1Bcf/d," Guillermo Turrent, CEO of CFEnergia, told Argus on the sidelines of the Energy Mexico 2018 conference held in Mexico City yesterday. "Then the idea is to open it up to the rest of the big industrials: Grupo Alfa, Arcellor Mittal, etc."
As part of the groundbreaking 2014 energy reform, CFE was legally divided into separate generation, supply and distribution divisions. CFEnergia is prohibited from supplying natural gas on more favorable terms to CFE generating divisions compared with other companies and so the trading platform "will provide a transparent, public index of natural gas prices in seven different zones across the country," Turrent said.
The platform will start with day-ahead pricing, with initial minimum contracts of 2.5mn cf/d but it will eventually be used for week-ahead pricing and some forward markets, he said.
"CFEnergia will initially be the market maker as it will be the only company making offers," but Turrent hopes that once a clearing house system is up and running, other companies will participate as buyers and sellers.
Most of Mexico's natural gas imports come from pipeline supply from the US as well as a small complement of LNG into the Manzanillo and Altamira terminals.
US gas pipeline imports to Mexico in October last year were 4.3 Bcf/d, up from 4.1 Bcf/d in September 2017 and up from 4.2 Bcf/d in October 2016, according to the latest information from the energy ministry.
LNG imports averaged 700mn cf/d in October 2017, down from 850mn cf/d in September, and up from the 508mn cf/d imported in October 2016.
Despite a recent uptick in LNG imports, CFEnergia's focus is on pipeline supply. The government will add an additional 8,000km of natural gas pipelines by the end of this year, increasing import capacity by 6.2 Bcf/d to a total of a little over 11 Bcf/d, said Turrent.
CFEnergia expects to buy around 60 LNG cargoes of around 3 Bcf each this year, similar to last year's levels. The company will likely buy fewer cargoes in 2019 once full pipeline import capacity is reached.