Pipeline Deal Means More U.S. Natural Gas for Mexico Power Plants

18-11-2019

Mexico is preparing to import more U.S. natural gas to supply the country’s gas-fired power plants and industrial facilities after the Mexican government reached a deal that will allow several stalled pipeline projects to be completed.

Mexican President Andres Manuel Lopez-Obrador on Aug. 27 said his administration’s deal with Canadian pipeline operator TC Energy; IEnova, a Mexican subsidiary of San Diego, California–based utility company Sempra Energy; and Mexican construction firm Grupo Carso ends a $3 billion stalemate over contracts for a handful of pipelines that will bring natural gas to Mexico from the Eagle Ford Shale of South Texas and the Permian Basin of West Texas.

Grupo Carso is owned by Mexican billionaire Carlos Slim. He said Tuesday that the agreement will give Mexico access to cheap natural gas, some of which can be used to further the development of natural gas-fueled vehicles in Mexico.

“This will allow us to substitute diesel and gasoline, which are not only more expensive but more polluting,” Slim said. “Natural gas is one-third the cost but there are also environmental benefits.”

The deal comes one month after Texas Gov. Greg Abbott sent a letter to Lopez-Obrador asking the Mexican president to end the political stalemate around the pipelines. Abbott said the deal was needed to get more natural gas moving from Texas to Mexico.

Negotiations continue between state-owned power company Comisión Federal de Electricidad (CFE) and Mexico City-based contractor Fermaca, an infrastructure firm that operates two pipelines in central Mexico that converge at Aguascalientes.

New Gas-Fired Power Plants

Sener, Mexico’s Ministry of Energy, earlier this year said the country expects to add an estimated 29,294 MW of combined-cycle gas-fired power generation capacity over the next 15 years. The forecast was published in Sener’s 2019-2033 Prodesen power sector development plan. Prodesen is the Program for the Development of the National Electrical System, which was introduced in 2015.

The projected capacity additions are up slightly from the forecast of 28,105 MW for the 2018–2032 period outlined in last year’s Prodesen plan under the previous Nieto administration. Sener is required to update the Prodesen document each year.


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