Mexican state utility Comisión Federal de Electricidad (CFE) said it is looking into possible corruption related to natural gas contracts with WhiteWater Midstream LLC.
CFE said that natural gas contracts signed in 2016 and 2017 under the previous Mexican administration are under investigation on both sides of the border for potential corrupt practices including influence peddling.
Two contracts with CFE subsidiary CFE Internacional (CFEi) are seen as being “unfavorable and unequal” to the Mexican state. A natural gas transport contract worth “billions of dollars” in the United States is also being probed, CFE said. Ex-CFE officials are under investigation, and legal action is being pursued against WhiteWater, CFE said.
Austin, TX-based WhiteWater Midstream said the accusations were unfounded, and that CFEi is in breach of contract for nonpayment.
“CFE’s repeated false statements to the media about WhiteWater follow our initiation of arbitration against CFEi for unpaid amounts owed,” a WhiteWater spokesperson told NGI’s Mexico GPI. “Particularly disturbing are the explicit threats from the state-owned enterprise to pursue criminal action on contracts that it sought to renegotiate for months, leveraging its non-payment. WhiteWater will vigorously pursue its contractual rights in arbitration.”
CFE is also in a payment dispute with Goldman Sachs Group Inc. A CFE trading subsidiary reportedly owes Goldman $400 million for natural gas trades that occurred when prices soared this past February after a freak winter storm in Texas battered the state’s energy system.
This is not the first time natural gas contracts signed by the previous administration have been questioned. In 2019, Mexico’s government forced the renegotiation of numerous natural gas contracts it saw as “abusive” and “unfair” to the state.
The $2.5 billion, 2.6 Bcf/d Sur de Texas-Tuxpan marine pipeline owned by Infraestructura Energética Nova (IEnova) and TC Energy Corp. saw its in-service stalled as the pipeline spat continued. Agreements were eventually reached when Grupo Carso CEO Carlos Slim, said to be Mexico’s richest man, helped broker a truce leading to a slew of renegotiated contracts.
The WhiteWater contracts were signed under former CFEnergía head Guillermo Turrent. A recent investigation by newspaper El Pais found that Turrent had worked in a previous job with some WhiteWater executives.
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 pipeline tenders currently being criticized by CFE head Manuel Bartlett.
CFEi is a major gas player in the United States. Through CFEi and its domestic counterpart CFEnergía, CFE has also supplanted state oil company Petróleos Mexicanos (Pemex) as the dominant firm in Mexico´s natural gas market.
CFE holds 8.2 Bcf/d of capacity in Mexico and 22 Bcf/d in the United States.
WhiteWater meanwhile has consolidated itself as a major midstream player in the United States. Earlier this year, WhiteWater and partner MPLX LP completed the 1.8 Bcf/d Agua Blanca pipeline expansion, boosting capacity to more than 3 Bcf/d. The pipeline connects nearly 20 gas processing sites in the Delaware sub-basin of the Permian region and transports gas to Waha from Culberson, Loving, Reeves, Pecos, Winkler and Ward counties in Texas, as well as in Eddy and Lea counties in New Mexico.
Plans call for Agua Blanca to connect to the Whistler natural gas pipeline under development by WhiteWater, MPLX and a joint venture between Infrastructure Partners and West Texas Gas Inc. The 42-inch diameter, 2 Bcf/d pipeline is expected to be in service in the second half of 2021.
WhiteWater is sponsored by Ridgemont Equity Partners, Denham Capital Management, First Infrastructure Capital and the Ontario Power Generation Inc. Pension Plan.
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