Natural gas pipeline exports from the United States to Mexico are beginning to gradually displace the country’s LNG imports.
Energy Information Administration said in a report that U.S. exports to Mexico set a monthly record high in July, averaging 3.3 billion cubic feet per day (Bcf/d) and averaged 2.7 Bcf/d in the first seven months of this year, 35 percent higher than in the same period last year.
In contrast, Mexico’s LNG imports were 7 percent lower in the first seven months of 2015 as compared to the same period last year, according to data from Secretaría de Economía.
With the rise of U.S. shale production and a decline in natural gas prices in recent years, the need in Mexico for LNG imports decreased. As a result, LNG regasification terminals have been operating below capacity.
Currently, Mexico has three regasification terminals, one on the east coast, Altamira and two on the west coast, Ensenada, also called Energia Costa Azul, and Manzanillo.
While utilization at the Manzanillo terminal has been relatively high, averaging 85% in 2013-14, the Altamira terminal was used around 50% in the same period, while the Costa Azul terminal in the Baja peninsula remains virtually unused.
Imports at the Energia Costa Azul terminal have averaged 4% of the terminal’s nameplate capacity since 2011, despite a long-term contract with the Tangguh liquefaction project in Indonesia. Due to low use, the terminal’s operator, Sempra Energy, is considering a conversion of the terminal into a liquefaction facility.
LNG imports at the Altamira terminal have consistently averaged around 50% of the terminal’s capacity in 2008-15. In the first six months of this year, imports to the Altamira terminal have declined by 14% compared with the same period last year, as increasingly available lower-priced pipeline gas from the United States displaced some of LNG imports into Altamira.
In September, Mexico’s Comisión Federal de Electricidad (CFE), that has a supply contract with terminal operators Shell and Total, canceled a tender for several spot cargoes into Altamira for a period between September and December, noting increased availability of less-expensive pipeline natural gas from the United States.
The Manzanillo terminal may follow suit in the coming years as additional pipeline infrastructure becomes available in the region to alleviate the existing bottlenecks.