Mexico’s first natural gas price index, released on Aug. 18, offers an initial but still limited view of prices in the deregulating natural gas market.

“Price transparency will evolve at the pace of the market’s development,” Meney de la Peza told NGI. She is head of the natural gas unit at Mexican energy regulator CRE.

“At the moment, the index which we started reporting last week shows prices at the national level and on a monthly basis,” she added. “That is in large part a reflection of how the Mexican market is operating at the moment, where a large number of deals are made a month in advance and at a fixed price, with little regional variation.”

The new index, known as the IPGN, is based on the monthly transaction reports that CRE receives from natural gas marketers operating in Mexico. It incorporates the price per molecule and delivery costs to provide a volume-weighted average for all deals carried out in the country during a given month.

For July, the IPGN reported a gas price of $4.10/MMBtu, which translates to 69.448 Mexican pesos per gigajoule. CRE will update the index on its website within 15 business days after the end of each calendar month. The regulator expects to stop publishing the IPGN once private price reporting agencies develop their own Mexico indexes.

According to figures from the CRE, 14 different gas marketers reported 101 deals during July, for a total transaction volume of 89.854 Bcf. To calculate the monthly price, CRE screened out three of these deals whose prices or volumes were more than three standard deviations from the mean, in line with the index’s reporting criteria, also published last week.

The deals compiled from the July reports do not break down by region because of flaws in the reporting system, but de la Peza said it was unlikely that prices varied much as state oil company Petroleos Mexicanos (Pemex), still the dominant player in the market, is charging the same price throughout Mexico.

“The transportation costs obviously vary from region to region, but it’s just one price per molecule,” she said.

Mexico has 18 gas marketers that have registered transactions at least once, although not all of them reported deals during July, according to CRE. The regulator had authorized a total 30 companies to operate as marketers as of August 7.

“For some marketers, after they secure an operating permit, it can take them several months before they start doing their first deals,” de la Peza said.

CRE plans to segment the monthly index by region or by specific nodes of high liquidity, and eventually publish daily prices. But at the moment, it isstill refining and streamlining the reporting system, which has been in place since 2016.

Currently, the monthly reports do not ask companies to specify what kinds of transactions they are reporting. Marketers must also submit daily transaction reports, which would capture shorter-term deals, but “we’re still receiving very little information on that front,” de la Peza said.

According to the official, the main changes under consideration include: the consolidation of the monthly and daily reports into a single report; modifying the requirements so that marketers must specify what kinds of deals they are reporting and where the gas is being delivered; and the elimination of several variables that CRE deems unnecessary or burdensome for marketers to report.

“Possibly in a couple of weeks we will send a draft of these changes to the reporting requirements to Cofemer,” the federal agency in charge of reviewing new regulations, de la Peza said. The regulatory review includes a public comment period that usually takes 1.5 to 2 months.

Once approved, the updated regulations would allow CRE to start publishing the monthly IPGN by region. De la Peza said that could occur as early as January 2018. However, the publication of a daily price index is likely further off.

“The changes to the report are going to help us better capture information, but at the end of the day it’s going to be the market that determines when we start seeing more [short-term] deals of this kind,” she said.