CENAGAS, the operator of the SISTRANGAS seeks to expand

The Centro Nacional de Control del Gas Natural (CENAGAS), is the operator of the Sistema de Transporte y Almacenamiento Nacional Integrado de Gas Natural (SISTRANGAS) and currently, the only shipper of the integrated systems, offering to the market integrated capacity and charging tariffs to the users.

In order to achieve its purpose, CENAGAS proposes and the Comisión Reguladora de Energía (CRE) approves the transportation rates for each tariff zone, as well as the terms and conditions that govern the provision of services.

With these tariffs charged for transportation services, the operator pays the different integrated systems for their respective revenue requirements, as well as their own management costs and, occasionally, the purchase of natural gas for the balancing of their systems.


1.- NEW INTEGRATION PROPOSAL

The   current   General   Director   of   CENAGAS,   Lic.   Elvira   Daniel, declared in April 2019 that the Mexican Government is   evaluating   “to   integrate   more   gas   pipelines   in   the   country"  to  convert  said  Center  into  a  "national  manager",consistent  with  the  provisions  of  the  Fourth  Review  of  the Five-Year Expansion Plan of the SISTRANGAS, published in the last days of March by the Ministry of Energ y, where the  intention  will  be  to  expand  the  SISTRANGAS  to  include  the following projects:



2.- Following moves

It is interesting to evaluate what should happen for CENAGAS to be able to integrate the referred projects into SISTRANGAS. It is worth reiterating that the incorporation is voluntary, so one of the first steps will be to find incentives for pipeline developers to seek integration, either in tariff, energy security or operational efficiency. Under this framework, the driver of integration requires an analysis of the different feasible options in each case, with the understanding that integration is acceptable for gas pipelines as long as there are economic incentives for the developer, and is acceptable for CENAGAS if it represents systemic benefits (security, continuity, reliability, redundancy, etc.)

As Pemex once was the anchor shipper, now CFE integrates into the scheme being a feasible long-term counterpart for CENAGAS contracts, highlighting the need to evaluate the options and conduct studies, such as those that were made for the transfer of the contracts of Los Ramones Fase I of Pemex Gas and Petroquímica Básica to CENAGAS itself.


3.- Possible incentives

  • Recover the certainty of the return on investment.
  • Solve a problem of public relations with the government.
  • Extend the commercial life of the infrastructure.
  • Reduce the administrative and regulatory burden when transferring commercial responsibilities to CENAGAS manager.


4.- Considerations

Parties interested in integration, need to build asolid case that includes, among others, pre-feasi- bility technical analyzes, a tariff proposal that considers the needs of the environment, a legal sequence in accordance with the regulatory framework and the understanding of bilateral relations that derive from integration, as well as a full understanding of the benefits and / or risks of the process.




Next Steps

The steps to continue with the integration plans would be the following:

  1. CENAGAS should approach the developers to know their interest in joining the system.
  2. Developers must obtain approval from their respective Boards of Directors, but more importantly from those entities that have financed part of their investments, such as banks or funds.
  3. Together, they must inform CRE of their intention to integrate.
  4. CENAGAS must include the integration and its motivations in the Five-Year Expansion Plan of SISTRANGAS 2020 to 2024.
  5. CRE must approve a new tariff packagefor the CENAGAS and resolve the integration.




In TALANZA we support our clients preparing the strategy for requesting integration, in which we involve regulatory, technical and economical arguments as well as advocacy efforts, for building a strong case in the application for integration.