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Yet another article about storage. Hopefully Mexico finally pays this "historical debt" it owes to its people.

Why Mexico needs natgas storage facilities

Bnamericas
Published: Friday, February 09, 2024



Building Mexico’s first natural gas storage project “is a historical debt that this government has with Mexicans,” according to energy expert Gonzalo Monroy, who manages energy consultancy GMEC.

A project to guarantee supply for power plants has been needed for more than 20 years but regulation, bureaucracy and a nonexistent business scheme for its commercialization in the country have hindered progress, Monroy told BNamericas in an interview.

“The big problem is that business models have not been developed, in addition to legal issues. That is the reason why this project has not progressed,” he said, adding that a few issues regarding regulation in the constitution were solved after gas network operator Cenagas was created by the 2013 energy reform.

But despite the natural gas crisis that Mexico experienced in 2021, President Andrés Manuel López Obrador’s administration did not prioritize storage. The leftist leader’s term ends in October.

During the February 2021 Uri winter storm, which brought freezing temperatures to North America, factories across Mexico’s northern region – Chihuahua, Coahuila, Tamaulipas and Nuevo Leon states – reported billions in losses due to a reversal in the flow of US natural gas into Mexico.

Natural gas is Mexico’s main fuel source, accounting for 52% of power generation, and about 70% is imported from the US, according to a report from the UN Economic Commission for Latin America and the Caribbean.

In a report published in 2022, economics think thank IMCO suggested three measures to guarantee natgas supply. The first was to carry out studies, the second to build storage facilities and the third to update storage policies.

"The country has only 2.4 days of natural gas storage in three facilities [but in LNG tanks]. This figure is below the average storage days of countries such as Austria (318.3), France (98.8), Italy (93.8) or Spain (34.2)," IMCO said.

The first project

Asked about the possibility that Cenagas could launch a tender next year for the first storage facility designed for natural gas, in the conventional Brasil field of the Burgos basin in northeast state Tamaulipas, Monroy told BNamericas that the work “is urgent.”

According to media reports, Mexican authorities are working on studies to launch the tender. While details are yet to be revealed, Cenagas has projected potential storage capacity of 495 billion cubic feet.

At the Brasil field, Tamaulipas energy development minister José Ramón Silva Arizabalo told news site Energía a Debate in recent days that state authorities are seeking to create a hub of energy projects, known as VolTam. However, federal power company CFE, which was expected to be the state government’s key partner, has not decided on the program’s model, nor has it assigned resources to begin the work.

https://www.bnamericas.com/en/features/why-mexico-needs-natgas-storage-facilities