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Pemex NatGas Contract Release Program Begins

Mexico’s Comision Reguladora de Energia (CRE) on Feb. 2 launched the first phase of the program to have state oil company Pemex release 70% of its natural gas supply contracts.

The official launch involved the random selection of the 30% share of contracts that will remain with Pemex and the selection of the 20% share that will be offered to third party marketers during the first phase. The remaining 50% share of contracts was also made public, though the selection of the specific contracts to be included in the second and third phases will be determined in the future.

The contracts chosen range from a single company with daily consumption of 128,800 gigajoules (GJ) to one with 43,100 GJ. Several packages consisting of groups of geographically close contracts were also selected, whose consumption ranges from 50 to 70 GJ/d. Among the contracts selected to remain with Pemex could be found steel producer ArcelorMittal, several generation units of power utility Federal Electricity Commission, and several independent power producers.

As per the official calendar, Pemex issued its binding offers for the phase one contracts on Monday (Feb. 6). Contract holders must submit their official notice whether to stay with Pemex or to seek a registered third-party marketer or reserve capacity in the system for themselves, within 15 working days from the program’s launch, i.e., until Feb. 23. Holders of contracts selected to stay with Pemex and those selected for the second and third phases may also submit the notice of their intention to seek a third-party marketer during this period. CRE will publish the updated lists of contracts on March 2.

Third-party marketers must make their counter-offers and negotiate contracts before March 24. All offers are for monthly prices in pesos per gigajoule at either the consumption point or a National Pipeline System injection point. The reference price is the Henry Hub in South Louisiana.

After marketers inform CRE about the contracts they have signed, CRE will allow contract holders to make a choice until May 25. If any still fail to make a choice, CRE will assign them a supplier by June 8. Service contracts will start on July 1 and last for one year.

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