LNG cargoes expected to tide Mexico over until U.S. gaslines reopen
Mexico expects to supply at least four shipments of liquefied natural gas (LNG) in the coming days to its power plants, the government said on Wednesday, after a rare winter freeze in the U.S. South limited fuel supply from Texas.
Mexico’s state-owned power utility Comision Federal de Electricidad (CFE) said it bought four LNG cargoes, up from the three cargoes announced earlier in the day by President Andres Manuel Lopez Obrador.
“Possibly, more will be bought. All plants are being restarted to resolve the problem,” he said.
The weather-related disruption to fuel supplies left millions without electricity in Mexico’s northern states of Nuevo Leon, Coahuila, Tamaulipas, Chihuahua, Zacatecas and Durango until Wednesday when fuel oil from state oil company Petroleos Mexicanos (Pemex) helped to restore power.
The CFE also said that the nation’s Altamira and Manzanillo terminals began on Tuesday the injection of 450 million cubic feet of gas to five thermoelectrical plants. The commission did not say if the supplied gas came from some of the four cargoes.
Analysts expect imported LNG to be a temporary relief for Mexico until warmer weather at the end of the week allows some U.S. gaslines to resume operations.
One of the expected shipments could arrive through Mexico’s Gulf coast on Malaysia-flagged tanker Seri Balhaf, which set sail on Wednesday from Freeport, Texas, according to Refinitiv Eikon data. Its estimated date of arrival in the Altamira terminal is Thursday.
A CFE official said earlier this week that cargoes could arrive from Asia through Mexico’s Pacific coast, where the Manzanillo LNG terminal is located.
Mexico’s government has not disclosed the names of the LNG suppliers, but the CFE said the purchases were made at a lower price than the natural gas that is imported from the United States through pipelines. The energy crisis in the U.S. South, which has left millions of people without power in Texas this week, has pushed natural gas prices up in recent days.
Mexico imports most of the natural gas it needs from the United States. It also imports LNG from Peru, the United States, Trinidad and Tobago, and Algeria.
The United States exported 4.2 billion cubic feet per day (BCF/d) to Mexico on Tuesday, the lowest level since May 2020, Refinitiv Eikon data showed. It compares to an average of 5.7 BCF/d in the previous 30 days.
Due to Mexico’s very limited natural gas storage capacity, the country could also increase its coal supply for power generation, the CFE said.
“Three or four shipments of LNG are enough for up to four days of supply to plants in northern Mexico,” said Mexico City-based energy analyst Gonzalo Monroy. “They are not an ultimate solution as expansion projects to expand Mexico’s gas storage capacity are urgently needed.”
Source: Reuters (Reporting by Ana Isabel Martinez, Abraham Gonzalez and Marianna Parraga in Mexico City, and Scott DiSavino in New York; Additional reporting by Adriana Barrera; Editing by Lisa Shumaker)