- DAILY GPI
- SHALE DAILY
Liquids infrastructure development in Mexico is ripe for private sector investment, with major global companies from North America and Europe eyeing the market, according to executives from Sempra Energy's Mexico City-based unit.
At an analyst meeting in New York City hosted by Sempra’s Infraestructure Energetica Nova, SAB de CV (IEnova), management said global gas and liquids demand in Mexico is a huge opportunity.
"Much like oil, natural gas is making a transition from being a regionally priced commodity to a global commodity, and gas is also creating a revolution in Mexico, displacing one oil-fired electric generation plant after another," Sempra CFO Jeffrey Martin said in keynote remarks. "Natural gas is a big part of the decarbonization story in Mexico, and we believe IEnova is helping to lead that."
Martin, who spoke with IEnova CEO Carlos Ruiz Sacristan, touted "remarkable” growth prospects in Mexico, headlined by the emerging liquids and renewables markets. "Our commitment to growth in Mexico is very strong," Martin said.
IEnova was launched publicly almost four years ago on the Mexican Stock Exchange.
While the Mexican natural gas network was 12,000 kilometers (km) of pipelines in 2012, it is expected to reach 20,000 km next year. However, most industries and homes do not have traditional gas pipeline service, according to IEnova's Tania Ortiz Mena, chief development officer. IEnova, she said, has captured about 30% of the ongoing growth projects.
"There is still substantial unserved demand in pipeline and other natural gas infrastructure," said Ortiz Mena, citing more than a half-dozen areas, including $4 billion for two major pipeline projects still to be tendered under the original government program. "Most are in the south and have not been bid so we will be following developments on those very closely."
Interconnections to existing transmission pipelines, compression, laterals to industrial customers switching to gas, and local distribution system build-outs are all viable markets, along with both underground storage (currently nonexistent in Mexico) and liquefaction.
"Today only 7% of Mexican households have access to natural gas," she said. "As we help build this transmission network we are confident there will be more distribution companies growing along the corridors."
As an example, in the state of Senora where a major new transmission line is being completed, two distribution systems are being developed for future door-to-door natural gas service, she said.
"I believe that Mexico urgently needs underground natural gas storage, and I think the Minister of Energy thinks that, too, because the national government is working on a specific strategic gas storage policy," said Ortiz Mena. Federal energy officials have indicated the policy should be issued by the end of this year. "It would set specific mandates for natural gas storage."
Potential storage investments would be $300-400 million for each facility, she said.
Longer term, a liquefaction project could be "the largest single natural gas infrastructure project in the history of Mexico."
Ruiz Sacristan said the liquids market in Mexico is new, but several global companies are interested in participating with IEnova.
"Most of the companies come from the United States and Europe, and they are companies that already send gasoline to Mexico” through the state-owned oil company, Petroleos Mexicanos. In the developing liquids market, he said, these companies would deal directly with end-use customers.