Mexico to be major purchaser of US natural gas

Bloomberg/Fuel Fix:
Mexico’s state oil company struck a deal to import U.S. natural gas from a Swiss trading house, a step that would help the nation secure a cheaper long-term alternative to fuel oil for its power plants.

A subsidiary of Petroleos Mexicanos will form a joint venture with Geneva-based Mercuria Energy Group Ltd. to handle the gas and will aim to be one of the five largest participants in the North American natural gas market, the company said Wednesday in an e-mailed statement.

Pemex, as the world’s ninth-largest oil producer is known, burns fuel oil for most of the power plants in Mexico and is seeking to cut its energy costs. The gas would be delivered to Mexico by pipeline from the U.S., where hydraulic fracturing technology has released abundant new supplies.

The joint venture will begin operations in the fourth quarter to coincide with the opening of the Los Ramones pipeline, a 1,200-kilometer project that will import gas to central Mexico from south Texas.

Legislation approved last year is ending Pemex’s 75-year monopoly on hydrocarbon production in Mexico, and the company has said it will form joint ventures with foreign companies.

Mercuria agreed in March to buy JPMorgan Chase & Co.’s commodity business for $3.5 billion. That deal, which has yet to be completed, will significantly increase the 10-year-old firm’s gas and power trading operations in North America and Europe.

Mercuria has grown from a 10-person shop in 2004 to the world’s fourth largest independent commodity trader with about 1,200 employees and revenue of $112 billion in 2013. Originally focused on oil trading, the closely-held firm has expanded operations to include coal, metals, natural gas and agricultural commodities.
...
I suspect that much of this natural gas will come from the Eagle Ford field in South Texas where producers have been concentrating more on the oil play.  It will give producers a major outlet for what has been excess gas.  It marks a major shift in in the direction of energy trade between Mexico and the US.

Comments

Popular posts from this blog

Should Republicans go ahead and add Supreme Court Justices to head off Democrats

29 % of companies say they are unlikely to keep insurance after Obamacare

Bin Laden's concern about Zarqawi's remains