CFE could take over natgas contracts from Pemex

Mexico's state power company CFE could take over some of the natural gas supply contracts that state oil company Pemex holds with private sector power generators, local papers reported. Generators that could be affected include France's EDF, Spain's Iberdrola and Unión Fenosa, Canada's TransAlta and Japan's Mitsubishi, which operate as independent power producers (IPPs). The transfer proposal would supply natural gas to the IPPs based on their necessities, allowing for more supply-demand flexibility, alleviating the generators from dispatch accountability, TransAlta's Mexico director JoAnne Butler told BNamericas. "We wouldn't have the risk of dispatch - of nominating it incorrectly," she said. Currently, "if we are dispatched down below a certain level we have to pay penalties to Pemex for not taking the gas. We can't go below a minimum amount," she added. "It just makes sense for the CFE to take the transportation and the supply. It's one less thing for the IPP to worry about. We would be working with the same company [CFE] so it would simplify things." Pemex's 25-year natural gas supply contracts, which guarantee fixed consumption volumes at international rates, will likely be passed to the CFE within the next few months, CFE investment director Eugenio Laris was quoted as saying by local press, adding that the proposals would need to be endorsed by the treasury inspector's office and legal issues would have to be fine-tuned. "It seems that the CFE and Pemex are working hard with their internal controlling organizations to come to an agreement. I can't say whether it's going to happen or not, but I know they are certainly making efforts to do it," Butler said.