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AMLO’s energy strategy ignored dependence on natural gas

The decrease in the production of natural gas in the country, coupled with the increase in domestic consumption due to the growing generation of gas energy, the buoyant industry, lack of infrastructure to store in the national territory and the favorable prices of hydrocarbon in the United States were the combination that led Mexico to rapidly increase its dependence on imports from the neighboring country through gas pipelines and in its liquid form through ships.

Although the administration of López Obrador has focused resources and speeches in favor of energy security with projects such as the construction of the refinery Two mouthsSector specialists agree that the country’s great dependence on natural gas is being overlooked and efforts are being focused solely on gasoline.

S&P Global Platts Analytics classifies Mexico as one of the few countries that depends mostly on a single nation for imports of this hydrocarbon; which « leaves the energy supply highly exposed to the US export strategy », something concerning considering that Mexico’s gas imports represent about 70 percent of total demand.

In the opinion of the consultant in regulation and economic analysis at Talanza Energy, Daniela Flores, since the last administration the decision was made, in the short term, to depend on the United States for the low prices it offers in this hydrocarbon.

« The network of gas pipelines anchored with the Federal Electricity Commission (CFE) was doubled, because there is a dependency between the natural gas system and the electricity system and in this administration it is more than clear that this trend is continuing. »

Fracking

The administration headed by Andrés Manuel López Obrador has been openly against fracking, something that according to con S&P Global Platts Analytics « It leaves more than half of Mexico’s total natural gas reserves on the ground, » and it also suspended the Jaf strategic storage project, a dry gas field that had the capacity to hold up to 10 billion cubic feet of this hydrocarbon and that required an investment of 240 million dollars.

However, Flores affirms that even if this project had continued, it would not have been ready to face the current shortage, as well as the production of natural gas would not be ready through the bidding round canceled in this administrationTherefore, he assured that the only ready and short-term thing is the storage of liquefied natural gas (LNG) in the terminals.

« At the time, the terminals were not very well seen by relevant participants in the sector, that is why CFEnergía stopped using those terminals. If it has the tubes, what are you going to spend? »

The specialist agreed that the meteorological crisis that the United States and northern Mexico are facing exceeded all kinds of projections, because even when there are snowfalls every year, critical alerts have never been officially issued.

Energy sovereignty?

The president of the Mexican Association of Natural Gas Vehicles (AMGNV), Andrés Bayona, insists that the private initiative is interested in participating in storage projects, since currently what is ‘packaged’ in the pipelines is barely enough for a day of consumption.

« That is critical but it is not so far from what happened in 2019 with gasoline and diesel, where we only have storage for three days. It is a great challenge to increase storage in the case of natural gas and there are opportunities to do so » , he claimed.

Some of the options that exist for the storage of hydrocarbons, in addition to the terminals, are depleted natural gas wells or saline caverns, so Mexico has a way of being able to develop storage, in addition to the development of shale gas, taking into consideration that we have the fifth world reserve of natural gas in the subsoil.

« However, there is some more recent restriction that must be reviewed in current policies, that is why we insist that we are open to review with the government the policies that exist for storage, for example of natural gas, there are many opportunities to develop storage in increasing the infrastructure, « he said.

The Ministry of Energy (Sener) and the CFE announced the arrival of two ships with liquefied natural gas, at the Manzanillo terminal and Altamira, which injected 450 million cubic feet of gas to the National Integrated Natural Gas Transportation and Storage System (Sistrangas).

This hydrocarbon may be treated in the two regasification plants that the country has, however, in Bayonne’s opinion, the problem is that the storage installed in these two plants does not cover more than 4 or 5 percent of national consumption.

« Of course the ships will serve but that is not a solution to offset the supply from the United States, » he explained.

Shortage precedents

In September 2007, a coordinated attack on six points of the Petróleos Mexicanos (Pemex) pipelines, located in Veracruz, caused the evacuation of thousands of people and the suspension of the supply of natural gas, affecting the activities of thousands of companies in states of the country. At that time, the National Chamber of the Transformation Industry (Canacintra) reported that the losses amounted to 100 million dollars per day.

After the attack, some measures were taken such as growing the gas pipeline network and the natural gas system in the country, however, for the president of the AMGNV, the reason for the current shortage is completely different, since it is « an exceptional situation ”Due to weather conditions that have not been present in Texas for many years.

« In 2007 there was a circumstance of terrorism due to an attack on a pipeline that affected the interior of the country. As a result of this, appropriate measures were taken at that time, and that is when the pipelines were doubled and new interconnections with the United States were sought, » he explained Andrés Bayona.

The Mexican Natural Gas Association (AMGN) agreed on this, arguing that the extreme cold and frosts of recent days are an extraordinary event for North America, “which is presented for the first time in the more than 100 years that natural gas has It has been used in Mexico, during which time it has positioned itself as a lever for development, being the most competitive and sustainable energy company ”.

Lack of coverage

The former general director of the Federal Water Commission (Conagua), Jose Luis Luege, assured that the natural gas shortage problem is not due to the freezing of pipelines, but to the exorbitant price that natural gas reached and that the government cannot pay federal because it did not contract coverage that guaranteed the price of gas this year.

Under normal weather conditions, the price of gas hovers around an average of $ 3 per million BTUs and at times reaches negative territory, but from the polar vortex that affected Texas the price reached $ 200 per million BTUs.

Consulted by MILLENNIUM, the Ministry of Finance affirmed that they do not contract natural gas coverage.

The CFE was asked for a position on the existence of natural gas hedges, but until press time the company did not issue any response.

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