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Mexico may look increasingly for natural gas imports via pipeline from the US rather than LNG due to the development of unconventional shale gas plays, Nikos Tsafos, a manager for US consultancy PFC Energy focused on upstream and gas, told BNamericas.
Mexico's domestic gas supply is insufficient to meet growing demand, and energy ministry Sener in its most recent gas forecast said it expects imports to rise 5.2% a year to reach 3.02Bf3/d (85.5Mm3/d) by 2024. LNG would account for two-thirds of imports by the final year, with the remainder coming from US pipelines.
"I think it's safe to say that there will be more of an effort in Mexico to see how it can import as much as possible from the US, because it's probably going to be able to get that gas cheaper than LNG," Tsafos said.
The fact that Mexico has primarily pinned its hopes for future gas imports on LNG regasification terminals is already evident. Two LNG regasification terminals have started service including Sempra Energy's Costa Azul plant in Baja California state and the Altamira plant on the Gulf of Mexico coast owned by Shell, Total and Mitsui.
Construction of Mexico's third terminal, Manzanillo, is underway and it will start operations in September 2011.
Manzanillo will be supplied by Repsol Comercializadora de Gas under a 15-year contract with Mexico's state power company CFE that links the gas price to the Henry Hub price. As such, CFE is essentially purchasing the gas at a US price, and future LNG imports to the country will also need to be priced competitively relative to gas transported from the US, Tsafos said.
Gas imports from the US will also be highly dependent on whether Mexico has the pipelines in place to deliver the gas where needed and on the required investment to do so, he added.
Manzanillo, for example, is located in Colima state on Mexico's Pacific coast far from the border and state oil company Pemex's gas production. LNG was thus a more viable option, but that may not be the case in other areas of the country.
"It's fair to say that if you look at four to five years ago, LNG was sort of the predominant import strategy. The shale gas developments in the US have probably changed that," Tsafos said.
Mexico's natural gas consumption is expected to rise by 2.8% annually from 2008 through 2024, reaching 11.2Bf3/d at the end of the period. Domestic production, by contrast, will reach 8.67Bf3/d by the final year.