Mexico steps up nat gas imports as Pemex fields lie idle

By Carlos Manuel Rodriguez
Bloomberg News

Mexico, which is building about six new power plants this year, is likely to step up natural gas imports because slumping prices for the fuel are deterring state-owned Petroleos Mexicanos from developing its own fields.

Domestic supply isn’t sufficient to cover the needs of Comision Federal de Electricidad, the country’s state-power company, Sergio Alcocer, Mexico’s deputy energy minister, said yesterday in an interview in La Jolla, California. Pemex is not planning to exploit as much as 1 trillion cubic feet of gas reserves it recently found to focus on oil output, he said.

“We anticipate that the country will keep importing more gas as long as it’s cheaper than producing it,” Alcocer said. “Pemex maximizes its profit when it produces and exports crude oil, and as a company, that’s where its interests lean.”

CFE, as the utility is known, is expected to start the construction this year of “about a half-dozen” power generation plants using fossil fuels, according to Alcocer. Increased demand for gas may boost sales from U.S. companies, such as Apache Corp. and Cheniere Energy Inc., that are building LNG export terminals betting they can find more foreign buyers.

Pemex, as the Latin America’s largest oil producer is known, has found mostly gas in nine deep-water wells that it has explored successfully since 2004. The Mexico City-based company has not developed plans to exploit the gas deposits that could add almost 1 trillion cubic feet of reserves.

Proved reserves are those that have a reasonable certainty of being recoverable under existing economic and political conditions with current technology.

Natural-gas futures traded in New York averaged $4.20 per million British thermal units during the first quarter, a 16 percent decline from a year earlier, as new wells from Wyoming to Pennsylvania led to excess supply in the North American market. Natural gas for June delivery dropped 14 cents, or 3.2 percent, to $4.178 per million btu at 12:15 p.m. on the New York Mercantile Exchange.