Why Mexico Needs to Modify Its Fuel Storage Policy

In an interview with Bloomberg Línea, the director of Cenagas said the country needs to change its policy so that strategic storage projects can become profitable

Pemex's Miguel Hidalgo Refinery in Tula de Allende, Hidalgo, Mexico. Photographer: Susana Gonzalez/Bloomberg
June 08, 2023 | 01:15 PM

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Mexico City — Mexico needs to change its energy policy to make strategic storage projects profitable, even though it is the natural gas priority for the rest of the decade, the director of the National Natural Gas Control Center (Cenagas), Abraham David Alipi Mena, said in an interview with Bloomberg Línea.

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“There definitely has to be a modification to public policy on energy because it has to be profitable for investors,” he said.

Strategic storage consists of an inventory of hydrocarbon reserves to supply them in case an emergency is declared. The case of natural gas is relevant because Mexico is a net importer, mostly from the United States via pipelines, and uses it to generate more than half of the electricity it demands.

Alipi Mena added that gas storage is a reverse engineering technical issue because it requires oil fields that were for extraction to be for injection.


“We are working on it, perhaps as an infrastructure work we would not have it this year, but we could deliver the technical package so that the next administration decides to start it up,” he concluded.

The former Pemex executive and Foreign Trade graduate said that the impact and cost must be known so that the increase in the gas transportation tariff is not significant and discourages its use.

Currently, the institution is working on national projects for surface storage of liquefied gas so that the gas pipeline system it manages operates without interruptions.


“Mexico has a LNG storage station in Manzanillo, Colima and another in Altamira, Tamaulipas. It is imported gas, we want liquefied gas systems but of national origin”, commented Alipi.

Mexico’s state-owned oil company Petroleos Mexicanos (Pemex) is already storing liquefied petroleum gas (LPG) for strategic purposes in underground facilities in the state of Veracruz, he revealed.

The project consists of two cavities for hydrocarbon storage with a capacity of 1.5 million barrels each, occupyinh an area of two hectares in the municipality of Ixahuatlán, Veracruz, according to a 2021 document from Mexico’s Security, Energy and Environment Agency (ASEA).

Pemex reported in March of this year about the underground facility’s refurbishment project, called Tuzandepetl Strategic Storage Plant, after a fire at the site killed five workers while they were performing maintenance work.


Pemex did not respond to Bloomberg Línea requests for more information about the project.

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Cenagas will guarantee gas supply along the ‘Interoceanic Corridor’

The director of Cenagas also revealed during the conversation that the agency will guarantee the supply of natural gas to the so-called ‘Interoceanic Corridor’ across the Isthmus of Tehuantepec, a project of President Andrés Manuel López Obrador (AMLO) that aims to link the Gulf of Mexico with the Pacific Ocean via railroad and the installation of industrial parks, to develop Mexico’s poorest region.

Cenagas currently operates a pipeline that transports 26 million cubic feet of natural gas exclusively for the Salina Cruz refinery in Oaxaca, located on the Pacific coast, but with the construction of a coker plant, the need for gas will increase to 70 million cubic feet.


To achieve this, Cenagas is working to increase capacity to 90 million cubic feet through three compression plants.

The demand for natural gas for the 10 industrial sites that the Mexican government intends to concession and sell is estimated at 11.3 million cubic feet per day.

The gas supply for the industrial parks would be in the hands of Pemex, with domestic production from the southeast, but also with imported gas from state utility CFE through the expansion of the marine gas pipeline.

“The supply is perfectly guaranteed, either by Pemex, which will be who it would have at hand right now because it is nationally produced gas, or we would have the capacity to inject imported gas through the expansion,” he added.

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