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CENAGAS, the operator of SISTRANGAS seeks to expand

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In this pager, partner David Rosales and Midstream and Downstream Consultant, Thalya Berrones, foresee the necessary incentives and considerations to be taken into account for the SISTRANGAS expansion.

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CENAGAS, the operator of SISTRANGAS seeks to expand

  1. 1. contact Paseo de la Reforma 483, 06500, Mexico City. T. +52 (55) 7316 2228 1200 Smith St, 77002, Houston, Texas. T. +1 (713) 353 3952 www.talanza.energy thalya berrones is in charge of providing advice to clients within the Midstream and Downstream sectors, in order to propose reliable and competitive solutions, through an in-depth analysis of the market conditions, the applicable regulation and the commercial potential for the business development. thalya.berrones@talanza.energy david rosalesprovides solutions for business development, regulatory compliance and feasibility analysis for natural gas and liquids projects. He has experience designing strategies to identify supply, demand and funding for infrastructure projects, including a deep feasibility analysis due to a profound understanding of the regulatory environment and t regional energy balances involved on each case, both for natural gas and liquid fuels. david.rosales@talanza.energy 1.-NEWINTEGRATIONPROPOSAL 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 theFive-YearExpansionPlanoftheSISTRANGAS,published in the last days of March by the Ministry of Energy, 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 projectsintoSISTRANGAS.Itisworthreiteratingthattheincorporationisvoluntary,sooneofthefirst stepswillbetofindincentivesforpipelinedeveloperstoseekintegration,eitherintariff,energysecuri- ty 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. 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. april 2019 CENAGAS,theoperatorofthe SISTRANGASseekstoexpand Comprehensiveenergyregulatory consultancygivenbyformerkey officialsthatparticipatedinthe designandimplementationof the newenergymodel. InTALANZAwesupportourclients preparingthestrategyforrequesting integration,inwhichweinvolve regulatory,technicalandeconomical argumentsaswellasadvocacy efforts,forbuildingastrongcase intheapplicationforintegration. NEXT STEPS CENAGAS must include the integration and its motivations in the Five-Year Expansion Plan of SISTRANGAS 2020 to 2024. 4 Together, they must inform CRE of their intention to integrate. 3 CREmustapproveanewtariffpackagefor theCENAGASandresolvetheintegration. 5 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. 2 CENAGAS should approach the develop- ers to know their interest in joining the system. 1 Thestepstocontinuewiththeintegration plans would be the following: 3.- POSSIBLEINCENTIVES 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 a solid 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. ANALYSTS Current tariff zones at SISTRANGAS Tuxpan – Tula PROJECT La Laguna – Aguascalientes Tula – Villa de Reyes Villa de Reyes – Guadalajara Sur de Texas – Tuxpan El Encino – La Laguna San Isidro – Samalayuca DEVELOPER TransCanada Fermaca TransCanada Fermaca TransCanada - IEnova Fermaca IEnova

In this pager, partner David Rosales and Midstream and Downstream Consultant, Thalya Berrones, foresee the necessary incentives and considerations to be taken into account for the SISTRANGAS expansion.

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