Mexico’s national pipeline operator Centro Nacional de Control del Gas Natural (Cenagas) has opened bidding for the supply of natural gas to ensure the Sistrangas pipeline system maintains system balance.

“Cenagas seeks to comply with its objective of guaranteeing the continuity and security of the use of services on the Sistrangas through the acquisition of gas supply which will allow for systemic and operational balance on the pipeline system,” it said in a statement marking the announcement.

Cenagas was created in 2014 under the framework of Mexico’s 2013 constitutional energy reform to promote market conditions “in furtherance of the principle of vertical disintegration, the ultimate goal of which is to guarantee continuity, quality, safety and efficiency in the provision of natural gas transport and storage services.”

The pipeline operator is calling on shippers to present proposals of natural gas supply, with the understanding that the supply will be used solely when the operational conditions on the Sistrangas require it.

Interested companies are asked to provide proof of all relevant permits, including upstream capacity; the injection points at which supply will be received; available minimum and maximum amounts of supply; the price index to be used for valuation of proposal; and the dates during which the supply offer applies.

Cenagas will receive proposals from now until January 31.

Supply should be available starting Feb. 1, ending on Dec. 31, 2020, with the option to extend annually. Cenagas will announce the need for supply on a daily basis through an electronic platform being established, with the lowest price offer for the volume needed winning the daily bid.

“This project is designed to purchase gas for balancing to maintain optimal conditions on the Sistrangas and to balance the system,” Cenagas’s head of planning and system management, Luis Bruno Moreno Ruiz, told NGI’s Mexico GPI. “Today we have just one supplier to help with balancing,” he said, referring to Mexican utility Comisión Federal de Electricidad (CFE) and the use of liquified natural gas [LNG] imports to fulfill the need.

“But LNG is expensive and is complicated and has its restrictions,” he said.

Moreno expects the online system to be up and running in two to three months, and that in the meantime communication will be over telephone and email.

“Once we have these pool of contracts in place, we will be able to seek nominations on a day-by-day basis. We can get natural gas at the best possible price, which in the case of LNG we are not getting. This will be a daily process, when needed, and whoever offers the best price for the volume needed wins. But for this we need a portfolio of contracts.”

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Detailed information on the process can be found here, in Spanish.

Proposals should be sent to convocatoriasuministro@cenagas.gob.mx and to Cenagas offices at:

Avenida Insurgentes Sur 838, piso 12,

Colonia Del Valle Centro,

Alcadia Benito Juarez, C.P. 03100,

Cuidad de Mexico

Mexico

The announcement comes on the heels of Mexico’s Comisión Reguladora de Energía (CRE) approving a new set of rules designed to improve operational discipline and efficiency on the Sistrangas.

Citing repeated gas flow imbalances in 2018 and 2019 due to natural gas extracted in excess (extractions greater than injections) or lack of natural gas injection (injections less than extractions), the new rules require Cenagas to publish a monthly report on its electronic bulletin board of all the actions it undertook in the preceding month to balance the system, and the users responsible for system imbalances.

Part of the reason system balancing is currently so challenging is a lack of sufficient meters throughout the system. The chronic imbalances reduce “the permissible operating pressure and puts at risk the provision of the transport service for the rest of the users,” CRE said.

Mexico has no underground natural gas storage capacity, relying on LNG and line packing for system balancing.