BY CONTINUING TO USE THIS SITE, YOU ARE AGREEING TO OUR USE OF COOKIES. REVIEW OUR
COOKIE NOTICE

Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you an email with your password.


  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you your password for security reasons. Please contact the Client Services team.

IF you are a Platts Market Center subscriber, to reset your password go to the�Platts Market Center to reset your password.

In this list
Natural Gas

Mexico's CFE plans to build new combined-cycle plants to take advantage of new gas pipelines

Natural Gas

S&P Global Platts launches Gas Indices America (GIA) natural gas indices

Natural Gas | Oil

Platts Wellscape P2P

Renewables | Natural Gas | Fuel Oil | Utilities

Central American Energy Conference, 22nd Annual

Natural Gas

Lopez Obrador willing to go to court to renegotiate gas transportation contracts signed by CFE

Mexico's CFE plans to build new combined-cycle plants to take advantage of new gas pipelines

Mexico City — To improve its cash flow from pipelines commissioned in recent years, Mexico's state power utility CFE will renegotiate gas transportation contracts and build new combined-cycle power plants, the company's CEO, Manuel Bartlett, said.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

S&P Global Platts asked Bartlett at a news conference Friday what CFE's gas strategy would be under President Andres Manuel Lopez Obrador, as well as how the company would employ capacity from newly developed pipelines.

"We need to promote new combined cycles, which is the fastest way to attend our urgent need for new generation," Bartlett responded.

Lopez Obrador has criticized Mexico's dependency on US gas imports for power generation, bringing uncertainty on CFE's vision, set by the previous administration, of expanding the utility's combined-cycle gas turbine power plant fleet.

Mexico currently generates half of its power using CCGTs. The previous administration projected that would continue until 2025, then decrease to 44.6% by 2030.

Under this forecast, Mexico would add 18.95 GW of new combined-cycle capacity during this period, increasing total CCGT generated power to 203.8 TWh from 148.4 TWh.

CFE, under former President Enrique Pe?a Nieto, signed transportation contracts for 6,400 km of new private gas pipelines anchored by construction of new CCGT plants or reconfiguration of existing fuel oil units.

The power utility commissioned these pipelines at the beginning of the 2010s with the plan of building and reconfiguring 22 power plants, Mexico's Federal Auditor General reported last week.

But ASF added that 14 of these power plants hadn?t been commissioned yet, as CFE is still evaluating their financial viability. The utility currently is paying for capacity at multiple operational pipelines that have no power plants to feed, ASF concluded, including the Tamazunchale-El Suez, the Chihuahua Corridor, El Encino-Topolobampo and El Encino-La Laguna pipelines.

Bartlett said that CFE would take advantage of pipelines commissioned under the previous government, although the utility wants to renegotiate contractual terms of certain pipelines, he added.

CFE seeks to negotiate to stop making payments for seven pipelines under force majeure, Bartlett added, but he declined to comments under what terms CFE will renegotiate with pipeline developers Fermaca, IEnova, TransCanada and Carso.

"We have explained [to these companies] that the conditions for all of those contracts are impossible to fulfill ... and are unequal," the CEO added.

Bartlett said the Mexican government would work with local communities to solve social opposition against uncompleted pipelines while it renegotiates the contracts.

CONTRACTS ARE GENERATING CASH FLOW PROBLEMS FOR CFE

The current terms in transportation contracts are affecting CFE's financial standing, Miguel Santiago Reyes Hernandez, CFEnergia's new general director, said during the conference.

"We have pipelines that reach 14 plants [that] do not exist, which is absurd," Reyes said. The company has already paid in two years more than Peso 9 billion ($450 million) for unused pipelines or pipelines under force majeure, he added.

There are seven CFE-contracted pipelines under force majeure that were affected by social problems, he added, including Tuxpan-Tula, Tula -Villa de Reyes, Samalayuca-Sasabe, Guaymas-El Oro, la Laguna-Aguascalientes, Villa de Reyes-Guadalajara, and the Sur de Texas-Tuxpan pipeline.

Under pipeline contracts, CFE will get free years of service after contracts expire in 300 months for the time the pipelines were unused. But this causes significant damage to CFE's cash flow, Reyes said.

Capacity payments on pipelines under force majeure alone amount to Peso 5.8 billion/year, Reyes said. The opportunity cost compared with investing in treasury bonds would be Peso 42 billion in 300 months, he added.

"This is creating significant damage to CFE in economic terms, because gas isn't flowing in nearly 50% of awarded pipelines," he added.

-- Daniel Rodriguez, newsdesk@spglobal.com

Gas Daily

Whether a risk manager, research analyst, trader or broker, Platts Gas Daily brings you crucial competitive intelligence across the entire North American natural gas marketplace. Click the link below for more information on how this market report can meet your business needs.

Free Trial