Mexico's Energy Secretariat (SENER) forecast in its third annual update of its five-year plan for the country's natural gas infrastructure that Mexico has a potential additional demand of 265 MMcf/d by 2022.
In addition to this potential demand, SENER forecasts gas demand on the SISTRANGAS system to be 5.7 Bcf/d in 2022 and for non-SISTRANGAS systems to be 2.1 Bcf/d.
SENER estimated this volume of potential additional demand by analyzing the results of a public consultation held by Mexico's state natural gas system operator, CENAGAS, last fall.
In the non-binding public consultation, users and shippers expressed interest to CENAGAS for an additional 4.14 Bcf/d of transportation capacity.
Daniela Flores Ramirez, SENER deputy director general for the natural gas and petrochemical markets, told S&P Global Platts on Friday that CENAGAS' consultation process revealed data duplication.
"We saw much duplication regarding capacity requests in the consultation, and we are being very cautious at the time of making projections," Flores said.
During the consultation process, for example, Pemex requested new capacity for multiple users who also requested capacity by themselves and or through new shippers, she added.
Flores agreed that this duplication in capacity requested in the consultation process reveals Mexico's gas market is becoming more dynamic and competitive.
However, measuring potential new demand has also been a challenge due to the lack of firm capacity contracts signed by potential new projects, she added.
"There has been much uncertainty regarding potential new demand as this needs to be reflected via a firm contract, and that is a major challenge," Flores said.
PEMEX DOMINANCE EXPECTED TO DIMINISH FURTHER
"We expect to continue seeing this tendency where the dominant player (Pemex ) continues ceding a portion of its portfolio of clients," Flores said.
Most of this capacity requested by users and shippers in CENAGAS's public consultation is located in the northern states of Nuevo Leon (1.16 Bcf/d) and Tamaulipas (664 MMcf/d).
Both northern states are major manufacturing and power-producing states. Also, additional transportation capacity was sought for the Gulf state of Veracruz (826 Bcf/d) and the central state of Hidalgo (542 Bcf/d).
This could hint that new shippers and users are very active in these regions, signaling Pemex could lose more clients in these states. "We will have to wait and see how the market reshapes after CENAGAS' contract renegotiation process," Flores said.
The state company is expected to continue losing more clients as Mexico's asymmetric regulation allows Pemex's clients to change shippers despite contractual obligations.
To date, Pemex has lost 1.1 Bcf/d of its gas marketing portfolio, or 32% of the total gas it shipped in 2017, data from Mexico's Energy Regulatory Commission (CRE ) shows.
According to Pemex's asymmetric regulation, the state company has to release 70% of the volume of its gas supply portfolio.
In February, CRE President Commissioner Guillermo Garcia Alcocer told S&P Global Platts that 30% of natural gas marketed in Mexico was handled by companies other than CFE and Pemex.
CRE's data shows Shell, Macquarie, BP, World Fuel Services, Fermaca's Santa Fe Gas, IEnova's EcoGas, and Total's Gas del Litoral and other 13 companies are operating in Mexico's liberalizing gas market.
BOTTLENECKS CAP DEMAND
According to SENER, demand on CENAGAS' SISTRANGAS system will grow to 5.7 Bcf/d by 2022 from 4.8 Bcf/d expected for 2018. Flores said that demand on SISTRANGAS had been constrained by various bottlenecks that prevent gas from flowing south.
When Cenagas completes the reconfiguration of its Cempoala compression station in the state of Veracruz in 2019, an additional 350 MMcf/d will be able to flow to southern Mexico.
This will allow demand on SISTRANGAS to expand to 5.4 Bcf/d in 2019. The construction of a second compressor station at Tecolutla, Veracruz, would allow gas demand on SISTANGRAS to grow to 5.7 Bcf/d by 2022, Flores said.
Demand on CFE-sponsored pipelines and other private systems will grow to 1.34 Bcf/d in 2018. Flores couldn't immediately provide to Platts the demand these systems had in 2017.
However, the demand growth in 2017 is expected to be significant for non-SISTRANGAS systems as CFE's sponsored Northeastern system begins fully operating, sending gas to Mazatlan in the Pacific state of Sinaloa, she said.
Demand in 2019 is expected to grow to 1.6 Bcf/d because of the entrance in operation of TransCanada and IEnova's 2.6 Bcf/d South Texas-Tuxpan marine pipeline, Flores said.
With the entrance in operation of TransCanada's 900 MMcf/d Tuxpan-Tula pipeline, non-SISTRANGAS demand is projected to grow to 2.1 Bcf/d by 2022, the SENER executive said.
