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LNG cargoes expected to tide Mexico over until U.S. gaslines reopen

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Ana Isabel Martinez and Marianna Parraga
·2 min read
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By Ana Isabel Martinez and Marianna Parraga

MEXICO CITY, Feb 17 (Reuters) - Mexico expects to supply atleast four shipments of liquefied natural gas (LNG) in thecoming days to its power plants, the government said onWednesday, after a rare winter freeze in the U.S. South limitedfuel supply from Texas.

Mexico's state-owned power utility Comision Federal deElectricidad (CFE) said it bought four LNG cargoes, up from thethree cargoes announced earlier in the day by President AndresManuel Lopez Obrador.

"Possibly, more will be bought. All plants are beingrestarted to resolve the problem," he said.

The weather-related disruption to fuel supplies leftmillions without electricity in Mexico's northern states ofNuevo Leon, Coahuila, Tamaulipas, Chihuahua, Zacatecas andDurango until Wednesday when fuel oil from state oil companyPetroleos Mexicanos (Pemex) helped to restore power.

The CFE also said that the nation's Altamira and Manzanilloterminals began on Tuesday the injection of 450 million cubicfeet of gas to five thermoelectrical plants. The commission didnot say if the supplied gas came from some of the four cargoes.

Analysts expect imported LNG to be a temporary relief forMexico until warmer weather at the end of the week allows someU.S. gaslines to resume operations.

One of the expected shipments could arrive through Mexico'sGulf coast on Malaysia-flagged tanker Seri Balhaf, which setsail on Wednesday from Freeport, Texas, according to RefinitivEikon data. Its estimated date of arrival in the Altamiraterminal is Thursday.

A CFE official said earlier this week that cargoes couldarrive from Asia through Mexico's Pacific coast, where theManzanillo LNG terminal is located.

Mexico's government has not disclosed the names of the LNGsuppliers, but the CFE said the purchases were made at a lowerprice than the natural gas that is imported from the UnitedStates through pipelines. The energy crisis in the U.S. South,which has left millions of people without power in Texas thisweek, has pushed natural gas prices up in recent days.

Mexico imports most of the natural gas it needs from theUnited States. It also imports LNG from Peru, the United States,Trinidad and Tobago, and Algeria.

The United States exported 4.2 billion cubic feet per day(BCF/d) to Mexico on Tuesday, the lowest level since May 2020,Refinitiv Eikon data showed. It compares to an average of 5.7BCF/d in the previous 30 days.

Due to Mexico's very limited natural gas storage capacity,the country could also increase its coal supply for powergeneration, the CFE said.

"Three or four shipments of LNG are enough for up to fourdays of supply to plants in northern Mexico," said MexicoCity-based energy analyst Gonzalo Monroy. "They are not anultimate solution as expansion projects to expand Mexico's gasstorage capacity are urgently needed."

(Reporting by Ana Isabel Martinez, Abraham Gonzalez andMarianna Parraga in Mexico City, and Scott DiSavino in New York;Additional reporting by Adriana Barrera; Editing by LisaShumaker)