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Mexico looks to build natural gas storage

26 Jun 2017 20:04 (+01:00 GMT)
Mexico looks to build natural gas storage

Washington, 26 June (Argus) — Mexico's pipeline administrator Cenagas is evaluating up to four locations for underground storage to match the growth in natural gas pipeline infrastructure.

Mexico meets half of its natural gas demand through pipeline supply from the US and LNG imports. But it has no underground storage sites — an omission Cenagas looks to correct through private investment.

"We will look at three-four strategic locations where Mexico can develop natural gas storage," Cenagas director general David Madero said today at a conference the US Energy Information Administration (EIA) hosted in Washington. Mexico's energy ministry is expected to issue a strategic natural gas storage policy by year-end.

In the absence of underground storage, Mexico relies on LNG imports to balance the market. "All we have is LNG facilities, so we are working with regasification facilities to move their business model to this type of services," Madero said.

Mexico projects that its natural gas imports will more than double by 2030, from 2015 levels, as domestic production falls. Domestic natural gas demand in the same time period is expected to increase by a more modest 20pc, to 9 Bcf/d in 2030 (255mn m³/d).

IEnova, the Mexican subsidiary of US utility Sempra Energy, earlier this month outlined investment opportunities in natural gas storage, estimating each project to cost between $300mn and $400mn.

Mexico's natural gas imports from the US averaged 3.7 Bcf/d last year, up by almost a third from 2015, according to EIA data.