Mexican natural gas pipeline action continues to heat up

Three groups have been shortlisted in the bidding process for the hotly contested rights to distribute natural gas in Mexico City and Valle Cuautitlán-Texcoco. Meanwhile, units of Petróleos Mexicanos and El Paso Energy Corp. have agreed in principle to link their pipelines at the U.S.-Mexico border, providing another conduit for gas trade between the two countries. Mexico's Energy Regulatory Commission (CRE) disclosed June 25 that the consortia that successfully met the technical

July 6, 1998

3 min read

Three groups have been shortlisted in the bidding process for the hotly contested rights to distribute natural gas in Mexico City and Valle Cuautitlán-Texcoco.

Meanwhile, units of Petróleos Mexicanos and El Paso Energy Corp. have agreed in principle to link their pipelines at the U.S.-Mexico border, providing another conduit for gas trade between the two countries.

LDC concessions

Mexico's Energy Regulatory Commission (CRE) disclosed June 25 that the consortia that successfully met the technical criteria for bidding on the two Mexico City-area local gas distribution concessions are:

Consorcio Mexigas, consisting of Bufete Industrial (Mexico), Gaz de France International (France), and Mexigas (France).
Consorcio Gas Natural Mexico, made up of Gas Natural SDG and Repsol SA (both of Spain).
Consorcio Proyecto de Energía de México, comprising Grupo Diavaz (Mexico), Controladora Comercial y Industrial (Mexico), and Lone Star Gas International (U.S.).

All three consortia have submitted bids for Mexico City and Valle Cuautitlán-Texcoco, a heavily populated area on the northern edge of Mexico City. However, the two regions may not be won by the same consortium. Current consumption of natural gas in the Mexico City concession area is 38.5 MMcfd, while consumption in Valle Cuautitlán-Texcoco is 71.7 MMcfd.

The final, economic phase of the bidding round will be decided by whoever offers the lowest rates to clients. The winner is expected to be announced by Aug. 4.

Border link

El Paso unit Tennessee Gas Pipeline Co. (TGP) and Pemex Gas y Petroquímica Básica plan to construct interconnecting facilities between their pipeline systems at the Texas-Mexico border.

The new facilities will be built from the end of TGP's Donna lateral in Hidalgo County, Tex., across the international border, and terminate at Pemex's existing facilities at Reynosa, Mexico.

The link, to be in service by January 1999, will enable both firms to transport gas between the two countries. TGP claims the link will give its customers transportation options from the U.S.-Canada border to the U.S. Mexico-border.

Pemex has entered into a 10-year commitment for 185 MMcfd of firm capacity on the TGP system. The firms expect to sign agreements in the next few weeks and begin construction after receiving regulatory approval soon thereafter.

TGP noted that when Mexico opened part of its downstream natural gas sector to private participation, it created for Pemex "both new business opportunities and challenges in serving the needs of its most important customers"and set the stage for further investment to modernize its transportation and marketing systems.

"The interconnect with Tennessee Gas Pipeline will provide Pemex with additional pipeline flexibility to meet these challenges," TGP said.