Mexico opens gas infrastructure capacity to bidders

Broad-based energy sector reforms could bring in as much as $415 billion in investments over the next 20 years.
By Daniel J. Graeber  |  July 20, 2017 at 9:12 AM
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July 20 (UPI) -- Mexico's government announced it held its first auction to access capacity to natural gas infrastructure as part of the country's sweeping energy reforms.

Hundreds of companies placed bids to access the capacity in the estimated 6,000 miles of natural gas pipelines in the country. According to the U.S. Energy Information Administration, demand exceeds available capacity on the pipeline system.

"Companies expressed high interest in cross-border interconnections with flows from southern Texas to Mexico on both private and CENAGAS-operated transmission pipelines," EIA stated.

CENEGAS is the Spanish-language abbreviation for Mexico's National Center for Natural Gas Control.

In a profile, the EIA said Mexican reform efforts enacted by President Enrique Peña Nieto could eventually sway internal market dynamics, but for now, "Mexico will remain a major destination for U.S. exports."

Mexican shale gas reserves are estimated at around 545 trillion cubic feet, which puts it in the top 10 in the world in technically recoverable reserves. Petróleos Mexicanos, or Pemex, started a fledgling shale exploration campaign in the Burgos basin just south of the U.S. border in 2015.

The Mexican economy is expected to grow at around 2.3 percent this year and manage only a 0.1 percent gain next year. Deregulation, meanwhile, caused gas prices to spike at the start of 2017 and brought pressure on Peña Nieto.

The broader reform program is meant to open the country up to outside oil investment for the first time since 1938, when the Mexican government took control of the country's oil industry and sidelined foreign investments. PEMEX had a monopoly over pipeline infrastructure before reforms were initiated in 2014.

The reforms could bring in up to $415 billion in investments over the next 20 years as the country establishes links to the rest of the world.

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