Guillermo Turrent, the former head of CFEnergía, the marketing arm of Mexico's state-owned Comisión Federal de Electricidad (CFE), strongly denied any wrongdoing in response to a report that he is being investigated for corruption.

Turrent, who constituted a bridge between U.S. natural gas producers and the nascent Mexican market for much of the previous administration, planned and carried out the gas tenders criticized by President Andrés Manuel López Obrador as being unfair to the Mexican state.

However, last Thursday, Turrent wrote a letter published by Reforma in which he ensured that the pipeline contracts were reviewed by the government and are legal. 

"That is what is stated in all the many files and in the audits that were conducted," Turrent wrote. He said the suggestion that property he owns in the United States was unlawfully acquired was false. The fact that the contracts for the CFE-anchored pipelines in dispute were successfully renegotiated at the end of August would support the argument.

Turrent, who has worked with Royal Dutch Shell plc, Sempra Energy and Electricité de France, among others, was generally seen as an exceptional hire in the Mexican state energy sector when he assumed the helm of CFEnergía.

There's an ideological, anti-market component in the brouhaha about Turrent, David Shields, editor and publisher of the Energía a Debate magazine, told NGI’s Mexico GPI.

"If someone is accused of receiving kickbacks, then surely those who give the kickbacks must be investigated as well," Shields said. "And nobody has made any sort of complaint against the companies that have reached a settlement on the pipeline contracts. On the contrary, the disputes were finally reached on very amicable terms."

In a column for NGI’s Mexico’s GPI, natural gas expert Eduardo Prud’homme argued that the pipeline conflict had nothing to do corrupt practices.

“What the new government wants is that participants in projects accept the new rules and nuances in their relationships with the CFE,” he wrote. “It seeks to show voters that the conditions achieved by the ‘market’ were advantageous only to private companies and that an exemplary and courageous act was necessary to prevent a national company from being affected by ‘abusive’ contracts.”

Marine Pipe Operational

The pipeline deal, which ended months of uncertainty in the Mexican energy sector when it was announced in late August, has already shown results. Earlier this month gas finally began flowing on the 2.6 Bcf/d Sur de Texas-Tuxpan subsea pipeline, considered essential for easing gas and electricity shortages in the Yucatán Peninsula.

The $2.5 billion marine pipeline owned by Infraestructura Energética Nova (IEnova) and TC Energy Corp., which connects to the Sistrangas national pipeline system at the 500 MMcf/d Monte Grande interconnection, was ready to enter operation in late June but had remained idle as the dispute dragged on. The Valley Crossing Pipeline, the U.S. system that feeds the Sur de Texas-Tuxpan line, issued a nomination notice on its electronic bulletin board last February.

Beyond TC and IEnova, the third developer that reached agreement with the government of Mexico was Grupo Carso, whose CEO Carlos Slim was instrumental to brokering the truce. Slim, said to be Mexico’s richest man, called the negotiations “cordial.”

In addition to the marine pipeline, the other six pipelines in conflict were Tuxpan-Tula (TC Energy), Tula-Villa de Reyes (TC Energy), Guaymas-El Oro (IEnova) and Samalayuca-Sásabe (Grupo Carso). The two pipelines that have yet to reach agreement were La Laguna-Aguascalientes (Fermaca), and Villa de Reyes-Aguascalientes-Guadalajara (Fermaca), crucial outlets for natural gas from the Permian Basin, which has seen negative prices this year, to reach industry in Guadalajara.

A working group with representatives from the government, the CFE and business chambers Consejo Mexicano de Negocios and Consejo Coordinador Empresarial continue dialogue with Fermaca with the expectation of “a positive result soon,” CFE CEO Manuel Bartlett said recently. Fermaca is said to be holding out because of constraints imposed by its financial backers.