After jumping on Monday, U.S. natural gas prices at locations key to Mexico came back to earth through Thursday on the back of weather-driven demand uncertainty.

Mexico imports

The Henry Hub June contract settled at $2.965/MMBtu on Wednesday, down 4.8 cents, while Agua Dulce stayed above the $3 mark but shed 5.8 cents to close at $3.067. Waha fell 4.8 cents to $2.800.

Natural gas imports from the United States are holding steady as Mexico enters its peak demand months. On Thursday, Mexico imported 6.43 Bcf from the United States, according to NGI calculations.

Import flows were highest on the Sur de Texas-Tuxpan marine pipeline, averaging over 900 MMcf/d over the past week.

New demand may open up soon as New Fortress Energy Inc. (NFE) sees the startup by the end of June of its liquefied natural gas (LNG) import terminal and associated 135 MW power plant in Mexico’s Baja California Sur state. The LNG project would also supply two Comisión Federal de Electricidad (CFE) natural gas-fired power plants.

Mexico gas demand should also be bolstered by improving economic conditions. Preliminary data from Mexico’s Instituto Nacional de Estadística y Geografía (INEGI) showed the nation’s economy grew by 20% in April compared with the same month last year. April 2020 is when the coronavirus completely shut down the Mexican economy.

Secondary activities, which include manufacturing, were up by 34.5% in April from a year earlier. Tertiary activities, which include services, expanded by 16.4%, INEGI said.

The Mexican economy grew 0.4% in the first quarter. After contracting for two years, Mexico’s economy should grow by 4.5% this year, according to the latest Central Bank survey of economists.

The coronavirus outlook is also improving dramatically. New coronavirus cases in Mexico on Wednesday were 2,000, compared to 3,009 a week earlier on May 12, with 8.73% of the population fully vaccinated, according to data provided by Johns Hopkins University.

Mexico’s coronavirus czar Hugo López-Gatell said on Tuesday at least half of the Mexican population had developed Covid-19 immunity and he foresaw herd immunity by September.


Mexico gas production fed into the national pipeline system Sistrangas fell to 1.206 Bcf on Wednesday compared with 1.390 Bcf a week earlier (May 12). The processing centers at Nuevo Pemex (341 MMcf), Burgos (310 MMcf) and Cactus (227 MMcf) in the southeastern part of Mexico were the leading injection points.

The five-day line-pack average on the Sistrangas was 6.864 Bcf on Wednesday (May 19) compared with 6.910 Bcf a week earlier, according to the Gadex consultancy in Mexico City.

The ideal line pack for Sistrangas is 6.86-7.29 Bcf/d to guarantee sufficient pressure in the system. Demand on the Sistrangas fell week/week and was 4.488 Bcf on Wednesday (May 19) compared with 4.832 Bcf a week earlier.

According to Gadex calculations, pipeline imports from the United States into the Sistrangas were 3.342 Bcf on Wednesday, versus 3.504 Bcf on May 12. LNG imports into the Sistrangas fell 4 MMcf week/week on Wednesday to 7 MMcf.

In pipeline news, the Cempoala-Emiliano Zapata section of the Cempoala-Santa Ana pipeline is scheduled to undergo maintenance on Tuesday (May 25).

Mexico Prices

The June Nymex contract settled at $2.925/MMBtu, down 3.9 cents day/day. NGI’s U.S. Spot Gas National Avg. shed 4.5 cents to $2.690.

In Mexico, natural gas spot prices fell in the industrial northeast, with Los Ramones down 4.2 cents at close on Thursday to $3.120. Monterrey shed 4.1 cents to $3.035.

The NGI Los Ramones price is estimated using the price at Alamo, TX, and adding pipeline transportation costs to Los Ramones via Sistrangas Zone 3. The Monterrey price is estimated using the price at Roma, TX, and adding pipeline transportation costs to Monterrey via the Kinder Morgan Mexico pipeline.

Tuxpan in Veracruz saw the spot price down 4.3 cents on Thursday, to $3.639. In the West, the Guadalajara price dipped 11.7 cents to $3.770.

The NGI Tuxpan price is estimated using the price at Brownsville, TX, and adding pipeline transportation costs via the Sur de Texas-Tuxpan pipeline. The Guadalajara price is estimated using the price at Aguascalientes and adding pipeline transportation costs to Guadalajara via the Villa de Reyes-Aguascalientes-Guadalajara (VAG) pipeline.

On the Yucatán Peninsula, the cash price at Mérida closed at $4.312 on Thursday, down 4.6 cents. The Merida price is estimated using the price at Cactus and adding pipeline transportation costs to Mérida via the Mayakan pipeline. 

High Side Storage 

On Thursday, the U.S. Energy Information Administration (EIA) reported a high-side 71 Bcf build to underground storage for the week ending May 14.

The South Central build of 31 Bcf led all regions and included a 20 Bcf injection into nonsalt facilities and an increase of 11 Bcf into salts. This is the region most relevant to Mexico, which has no underground gas storage facilities.

For the week ended May 14, total working gas in the South Central region stood at 1,078 Bcf, up 197 Bcf from the same time one year ago. However, it was 102 Bcf lower than the average 959 Bcf in storage for the same day between 2017-2021.

Regulatory Matters

This week, Mexico’s energy regulator Comision Reguladora de Energia (CRE) declared 139 oil and gas permits as expired. Most of those permits were for supplying fuels. The move is part of a new amendment to the nation’s Hydrocarbons Law, which grants the state sweeping powers to grant and revoke permits.

Analysts at Fitch Ratings said gas pipelines are less likely to be targeted under the new law than other segments of the hydrocarbons market. Next up are the June 6 midterm elections, which could have important ramifications for the energy sector.