Daily GPI / NGI The Weekly Gas Market Report / Mexico

Cenagas Launches EBB for Sistrangas Pipelines in Mexico

After several months' delay, Mexico's largest pipeline system, the Sistrangas, launched an electronic bulletin board (EBB) last week.

The system operator, the Central de Control del Gas Natural (Cenagas), went live with a public version of the Sistrangas EBB on Friday afternoon, although it had demonstrated an earlier version of the platform at a Shippers Day event in January.

The EBB includes "information on capacity, commercial operations, contracts, injection and extraction points, tariffs, regulations and notifications, among other things," the operator said on Twitter. "The bulletin board is subject to further improvement, and Cenagas is always open to feedback."

After the 2013-2014 energy reforms, the Mexican government issued in early 2016 open access regulations that included a mandate for all pipeline operators to create EBBs. Since then, the various private pipelines outside of the Sistrangas have designed and started to launch EBBs, with most of them available online in some form at the end of 2017.

Cenagas had originally expected to release the Sistrangas EBB last year. However, the platform's launch was delayed as the operator had to spend more time working with some users to help them better understand the system's nomination cycles, Cenagas officials told NGI's Mexico GPI last year.

Shippers on the Sistrangas are a mix of companies with ample international experience in competitive natural gas markets and local firms accustomed to the pre-reform model, where state oil company Petroleos Mexicanos (Pemex) was the sole supplier.

Moreover, Mexico's current open access rules apply to individual pipelines but not to integrated systems like Sistrangas, which is comprised of the national SNG pipeline system and six privately owned pipelines. As a result, Mexico has no framework -- or mandate -- in place for Cenagas to create a bulletin board for the Sistrangas.

Regulations for integrated systems are expected to come later this year, and Cenagas officials have said they would likely be similar to the current rules. In the meantime, the operator has designed the Sistrangas EBB following the existing regulations in Mexico as well as international best practices.

The end result is a platform that appears to be in compliance with the North American Energy Standards Board (NAESB) guidelines.

"The site interface and menu options are very much like that of a U.S. interstate pipeline," said NGI's Patrick Rau, director of strategy and research. "NAESB compliance would help promote a more seamless transition for U.S. shippers on the Sistrangas system."

Cenagas is working to promote the adoption of NAESB standards in Mexico. Last August, it modified the Sistrangas terms and conditions to incorporate a NAESB-style nomination timeline, consisting of two next-day cycles (timely and evening) and three intraday cycles. Some of the private pipelines in Mexico have also adopted similar five-cycle nomination periods.

Energy sector officials in the Mexican government hope that EBBs on Sistrangas and the private pipelines, along with transaction reporting requirements for marketers, will help provide transparency and boost competition in the country's fledgling natural gas market.

The EBBs in particular would help provide transparency in the secondary capacity market, which has yet to fully emerge in Mexico. Energy officials are currently working on a package of regulatory reforms to streamline and clarify the rules for trading capacity rights on gas pipelines.

The Sistrangas spans 10,212 kilometers (6,345 miles) across 20 of Mexico's 31 states and the federal district. Cenagas currently manages 75 transport contracts for firm and interruptible capacity on the system, which has an operating capacity of 6.4 Bcf/d.

A total of 52 companies operate on the Sistrangas, including 36 end users and 16 marketers. In an assignation process at the beginning of 2017, shippers reserved 97% percent of the firm capacity available on the system. The process included an open season in April at which private companies were able to take firm capacity on Sistrangas for the first time.

The contracts all took effect in July, marking the launch of the Mexican gas market's capacity reservation regime. Private shippers now hold rights to around 16% of the firm capacity on the Sistrangas. The remainder is distributed among Pemex and the state electricity utility Comision Federal de Electricidad (CFE) and its independent power producers.

The Sistrangas contracts are for one-year terms expiring July 1. Cenagas is allowingshippers to renew their existing contracts for longer terms, but they may not take additional capacity on the system.

The contract renewals are due to wrap up in May. The process has replaced a second open season, originally planned for the beginning of this year but now postponed until the second half of 2018 at the earliest.

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