Fermaca starts new gas export line to Mexico

Fermaca's 1.32 Bcf/d La Laguna-Aguascalientes natural gas pipeline launched operations today, a key component of the Wahalajara system that will flow natural gas from Texas into central Mexico.

"With direct access to the Waha basin, an enormous natural gas reserve with some of the most competitive prices in the world, this system has a combined capacity of 5 Bcf/d," Fermaca said today.

The 453km (281-mile) pipeline connects into the El Encino-La Laguna pipeline to the north and the Villa de Reyes-Aguascalientes-Guadalajara pipeline to the south, creating a 2,150km trunk line that covers seven states.

The pipeline, built at a cost of Ps14.4bn ($749mn), was one of 25 pipelines contracted by CFE during the previous administration as part of an effort to increase import capacity to 11 Bcf/d and total network capacity to 15 Bcf/d.

Flow information is not yet available on the Fermaca electronic bulletin board.

But the launch of operations has been delayed for over a year, because of local opposition and, earlier this year, a contract renegotiation with CFE.

CFE claimed the contracts were prejudicial to the utility. But following months of renegotiations, Fermaca reached a deal in September that established a new tariff structure and extended the contract by 10 years.

The last pipeline in the Wahalajara system, the 886mn cf/d Villa de Reyes-Aguascalientes line, should start operations next March, Miguel Reyes, director of CFEnergia told Argus previously.

Four pipelines, with a combined capacity of 3.13 Bcf/d, out of the 25-line build out remain outstanding but are expected to launch operations within the next three years once local opposition is resolved.

Mexico relies heavily on natural gas imports as domestic production has declined since 2010. US pipeline imports more than quadrupled between 2009 and this year, with 5.39 Bcf/d imported in September. Mexico's state-owned Pemex produced 4.88 Bcf/d of gas in October, up from 4.84 Bcf/d in October a year ago.

By Rebecca Conan