Mexico to soon have regulations in place for LNG plants

Sep 17, 2001 02:00 AM

Mexico will soon have regulations in place for the LNG plants that have emerged as an alternative to meet growing gas requirements, the country's energy regulator has announced. Dionisio Perez-Jacome, president of the Energy Regulatory Commission, said that it was decided to include LNG under "storage," since the gas is delivered to tanks for regasification and distribution.
Laws were changed in 1995 to allow private companies to store, transmit and distribute natural gas in Mexico, where the market is dominated by state oil monopoly Pemex. Import tariffs were lifted in 1999. LNG wasn't included in the original regulations.

Interest in LNG plants in Mexico as an alternative source of supply began increasing with last year's rise in natural gas prices, given Mexico's growing reliance on imports and limited pipeline connections to the US. Perez-Jacome said at least 10 companies have expressed interest in building such plants in Mexico, both on the Gulf coast where industrial demand is strong and in the north-western state of Baja California, which is removed from Pemex' pipeline network.
Shell Gas & Power, a unit of Shell, and El Paso Global LNG, a unit of El Paso, announced in June plans to invest $ 300 mm in a joint-venture to build an LNG plant at Altamira, an industrial city on the Gulf coast. The plant is expected to start operations in 2004.

Executive branch approval of the new natural gas regulations could be ready in six weeks, and LNG permits would take two-and-a-half to three months to process, Perez-Jacome said. The permits will give plant owners a five-year grace period from start-up before open access to the plants is required, he added. He said imported LNG would be free of regulation, since it is subject to competition.

Source: Dow Jones via Energy24
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