{"id":2994,"date":"2020-11-10T12:09:55","date_gmt":"2020-11-10T18:09:55","guid":{"rendered":"http:\/\/accesstomexico.mx\/blog\/?p=2994"},"modified":"2020-11-13T12:13:42","modified_gmt":"2020-11-13T18:13:42","slug":"mexico-to-remain-vital-outlet-for-u-s-natural-gas-veteran-trader-says","status":"publish","type":"post","link":"https:\/\/accesstomexico.mx\/blog\/mexico-to-remain-vital-outlet-for-u-s-natural-gas-veteran-trader-says\/","title":{"rendered":"Mexico to Remain Vital Outlet for U.S. Natural Gas, Veteran Trader Says."},"content":{"rendered":"\n
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NATURAL GAS INTELLIGENCE<\/a><\/p>\n\n\n\n

The continued development of Mexico\u2019s natural gas market will be vital for U.S. suppliers over the coming years, according to NAmerico Energy Holdings LLC (NEH) President Jeff Welch.<\/p>\n\n\n\n

Welch spoke on a virtual panel Tuesday at the LDC Natural Gas Forum 2020.<\/p>\n\n\n\n

He noted that Mexico\u2019s gas market is still in the nascent stages of development relative to the mature and highly liquid U.S. market, which began the deregulation process in the mid-1980s. In Mexico, by contrast, liberalization of the formerly state-dominated market didn\u2019t start until after the 2013-2014 constitutional energy reform.<\/p>\n\n\n\n

\u201cI\u2019m not going to pass judgment on where we are in Mexico with respect to maturity, but I would say that we\u2019ve got some time to go,\u201d said Welch, who served previously as the head of North American gas for EDF Trading North America LLC.<\/p>\n\n\n\n

\u201cAnd using a sports metaphor I\u2019d say we\u2019re probably in the first quarter of a four-quarter game with respect to developing that level of transparency and liquidity and connectivity,\u201d he continued.<\/p>\n\n\n\n

While Mexico has become increasingly dependent on gas imports from the United States, cross-border gas flows are equally important to producers north of the border in order to balance the market and take full advantage of technological advances in horizontal drilling and hydraulic fracturing, Welch said.<\/p>\n\n\n\n

With a population of about 128 million, Mexico is currently the world\u2019s No. 8 largest gas market, Welch said, noting that its gas demand has grown steadily while domestic supply has dropped.<\/p>\n\n\n\n

Although Mexico has more than sufficient reserves to meet its needs, state oil company Petr\u00f3leos Mexicanos (Pemex) has prioritized crude production instead.<\/p>\n\n\n\n

As a result, \u201cI don\u2019t know that you\u2019re going to necessarily see that capital allocated\u201d to natural gas production in Mexico, Welch said.<\/p>\n\n\n\n

He also noted that there are about 60,000 kilometers of natural gas pipelines in Mexico, versus some 200,000 kilometers in Texas alone, illustrating the difference in maturity between the U.S. and Mexican markets.<\/p>\n\n\n\n

Welch stressed the importance of that metric, \u201cgiven our desire to introduce liquidity\u201d to the Mexican market.<\/p>\n\n\n\n

While the United States has developed a \u201chub-and-spoke\u201d natural gas pipeline system, Mexico remains more of a \u201cpoint-to-point\u201d system, Welch said, explaining that, \u201cwe simply need more connectivity\u201d to allow similar natural hubs to develop in Mexico.<\/p>\n\n\n\n

The United States also has the advantage of clear, stable regulations and certainty around the legal framework.<\/p>\n\n\n\n

\u201cSpeaking for our private equity sponsors, there\u2019s got to be a stable, very U.S. government-type of enterprise that\u2019s leading that opportunity set in Mexico for serious consideration on investment in that area,\u201d Welch said.<\/p>\n\n\n\n

He cited concerns raised recently by a bipartisan group of U.S. legislators to President Trump about anti-competitive practices by the Mexican government with respect to the energy sector.<\/p>\n\n\n\n

President Andr\u00e9s Manuel L\u00f3pez Obrador has said publicly that Pemex and state power utility Comisi\u00f3n Federal de Electricidad (CFE) must be given preferential treatment, raising concerns about an unfair disadvantage for non-state actors in the market.<\/p>\n\n\n\n

While natural gas has been less impacted by these measures so far than the refined products, liquefied petroleum gas and electric power segments, a level playing field is \u201ccritical nonetheless\u201d for companies looking to invest in Mexico\u2019s gas market, Welch said.<\/p>\n\n\n\n

Challenges aside, \u201cI don\u2019t think that Mexico really has a choice with respect to natural gas,\u201d he said. He noted the massive buildout of cross-border pipelines from the U.S. to Mexico commissioned by state power utility Comisi\u00f3n Federal de Electricidad over the last decade or so.<\/p>\n\n\n\n

\u201cIt is much needed and it is very much welcome from the U.S. side\u2026one person\u2019s high price is another person\u2019s low price or vice-versa, and I think it\u2019s a very important symbiotic relationship that will continue to grow through time\u2026\u201d<\/p>\n\n\n\n

He added, \u201cI believe the U.S. with respect to serving Mexico, has the ability to meet every need that Mexico has\u2026through existing and planned infrastructure.\u201d<\/p>\n\n\n\n

Andrew Baker. (2020). Mexico to Remain Vital Outlet for U.S. Natural Gas, Veteran Trader Says. USA.\u00a0NATURAL GAS INTELLIGENCE.<\/em>\u00a0Recuperado de\u00a0<\/strong>https:\/\/www.naturalgasintel.com\/mexico-to-remain-vital-outlet-for-u-s-natural-gas-veteran-trader-says\/<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

NATURAL GAS INTELLIGENCE The continued development of Mexico\u2019s natural gas market will be vital for U.S. suppliers over the coming years, according to NAmerico Energy Holdings LLC (NEH) President Jeff Welch. Welch spoke on a virtual panel Tuesday at the […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-2994","post","type-post","status-publish","format-standard","hentry","category-uncategorized","clearfix"],"_links":{"self":[{"href":"https:\/\/accesstomexico.mx\/blog\/wp-json\/wp\/v2\/posts\/2994","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/accesstomexico.mx\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/accesstomexico.mx\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/accesstomexico.mx\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/accesstomexico.mx\/blog\/wp-json\/wp\/v2\/comments?post=2994"}],"version-history":[{"count":1,"href":"https:\/\/accesstomexico.mx\/blog\/wp-json\/wp\/v2\/posts\/2994\/revisions"}],"predecessor-version":[{"id":2996,"href":"https:\/\/accesstomexico.mx\/blog\/wp-json\/wp\/v2\/posts\/2994\/revisions\/2996"}],"wp:attachment":[{"href":"https:\/\/accesstomexico.mx\/blog\/wp-json\/wp\/v2\/media?parent=2994"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/accesstomexico.mx\/blog\/wp-json\/wp\/v2\/categories?post=2994"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/accesstomexico.mx\/blog\/wp-json\/wp\/v2\/tags?post=2994"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}