Mexico’s natural gas production is helping to meet national demand as U.S. prices continue to soar this summer.


“Mexican dry gas output is ramping up again,” WoodMackenzie analyst Richardo Falcón told NGI’s Mexico GPI.

Since July 21, dry gas production has averaged nearly 2.5 Bcf/d, up 0.24 Bcf/d above average levels seen for the past two months. This includes a year-to-date record high of 2.6 Bcf registered on July 24, according to Wood Mackenzie data.

This figure still pales in comparison to overall demand needs. To date in August, natural gas pipeline imports from the United States are averaging 6.2 Bcf/d, according to Wood Mackenzie’s preliminary estimates. NGI data has pipeline imports averaging 6.42 Bcf/d over the past 10 days.

Meanwhile, gas prices in the United States continue to soar. After two days in the black, natural gas futures prices reached new heights on Wednesday. The September Nymex gas futures contract hit a $4.205 intraday high before settling at $4.158, up 13.1 cents from Tuesday’s close.

There was some Mexico-related concern on Monday (Aug. 2) when prices in the Desert Southwest, El Paso S. Mainline/N. Baja jumped 47.5 cents to $7.410. RBN Energy LLC analyst Jason Ferguson noted that a pipeline outage in Mexico was pushing back on flows from the United States, further constraining the El Paso Natural Gas Pipeline South Mainline.

Falcón said there were “temporary flow restrictions along Mexico’s northwest,” as well as some programmed maintenance rounds. “But neither of these have led to major outages so far.”

A source told NGI’s Mexico GPI that there were also “significant traces of dust in the flow” of the Samalayuca-Sasabe pipeline downstream of the El Paso pipeline.

Longer term, the Mexican gas market was given an infrastructure boost this week when Mexican state power utility Comisión Federal de Electricidad (CFE) announced it had signed a memorandum of understanding (MOU) with TC Energy Corp. to advance two natural gas pipeline projects. The MOU also is designed to “consolidate” several existing firm natural gas transport agreements between the firms.

CFE agreed “to take a more active role” in resolving social conflicts and shepherding TC’s stalled 886 MMcf/d Tuxpan-Tula pipeline to completion. The companies also agreed to jointly work toward developing an offshore natural gas transport system from Tuxpan to the Yucatán Peninsula, CFE said.

Despite this, “signs are worrying” for the private sector in Mexico, a gas buyer told NGI’s Mexico GPI. New burdensome regulations around corporate outsourcing rules, a third wave of coronavirus infections, and the government’s push to regulate liquefied petroleum gas prices are causing concerns.


Mexico’s Sistrangas five-day line pack average was 6.542 Bcf/d on Wednesday, once again below the optimal line pack of 6.86-7.29 Bcf needed to guarantee sufficient pressure in the system.

Demand on the Sistrangas on Wednesday (August 4) was 4.541 Bcf, compared with 4.719 Bcf a week earlier. Mexico gas production fed into the Sistrangas slipped week/week to 1.266 Bcf on Wednesday from 1.289 Bcf. The processing centers at Nuevo Pemex (307 MMcf), Burgos (284 MMcf) and Cactus (360 MMcf) were the leading injection points.

According to calculations from the Gadex consultancy, pipeline imports from the United States into the Sistrangas were 3.223 Bcf on Wednesday, down considerably from 3.551 Bcf on July 28. LNG imports into the Sistrangas were down 4 MMcf week/week on Wednesday at 4 MMcf.

Mexico Prices

Higher prices have been a trend for Mexican buyers all summer amid strong weather-driven demand, weak U.S. production and rising global gas demand. NGI’s August Bidweek U.S. National Avg. climbed 35.0 cents month/month to $3.900/MMBtu, dramatically up from the 2020 Bidweek National Avg. for August of only $1.680

At points key to Mexico trades, the Henry Hub September contract closed at $4.159 on Wednesday, up 13.1 cents. Agua Dulce was up 13.1 cents at $4.113, while Waha was up 12.9 cents to close at $3.934.

Houston Ship Channel prices for September settled at $4.132, up 13.1 cents.

Meanwhile, NGI’s Spot Gas U.S. National Avg. tacked on 2.5 cents to $4.145.

In Mexico, NGI natural gas spot prices rose in the industrial northeast, with Los Ramones up 8.2 cents at close on Thursday to $4.461. Monterrey rose 8.1 cents to $4.358.

Tuxpan in Veracruz saw the spot price up 8.2 cents on Thursday to $4.971. In the West, the Guadalajara price was up 6.0 cents at $5.008. Farther north in El Encino, prices were $4.573, up 6.1 cents from the previous day.

On the Yucatán Peninsula, the cash price at Mérida closed at $5.650 on Thursday, up 8.4 cents.

U.S. Gas Injections

On Thursday, the U.S. Energy Information Administration (EIA) reported a modest 13 Bcf injection into storage inventories for the week ending July 30. It reflected an “uncomfortably tight supply/demand balance,” according to Bespoke Weather Services.

South Central withdrawals surprised the market. The 19 Bcf withdrawal in South Central salt inventories was the largest third-quarter salt draw of all time, reflecting higher export demand and high temperatures. Nonsalts dropped by 3 Bcf.

For the week ended July 30, total working gas in the South Central region stood at 976 Bcf, down from 1,214 Bcf from the same time one year ago. The figure was also 77 Bcf lower than the average 1,053 Bcf in storage for the same day between 2017-2021, EIA said.