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Pemex declares critical natgas shortage in Mexico

08.22.2012  | 

When critical alerts are announced, industry and distributors must halt or limit their use of natural gas since falling pressure can damage to the pipelines. Pemex said the critical alert applied just to central and eastern Mexico. The company blamed an electrical discharge during heavy rains.

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By LAURENCE ILIFF

MEXICO CITY – Mexico’s state-owned oil company Petroleos Mexicanos, or Pemex, said Wednesday that equipment failure caused a critical shortage of natural gas in its pipeline system and declared a 24-hour alert beginning at noon that will restrict industry's access to the fuel.

The alert was another in a series of natural-gas alerts that has sparked complaints from industries that rely on the gas for their operations.

Pemex said in a statement that an electrical discharge during heavy rains in the Gulf Coast state of Veracruz forced the shutdown of a natural gas supply station, which reduced pipeline pressure in the oil company's central and eastern regions.

When critical alerts are announced, industry and distributors must halt or limit their use of natural gas since falling pressure can cause damage to the pipelines.

Pemex said the critical alert applied just to the central and eastern parts of the country.

Earlier this month, the industrial association Concamin said the natural gas alerts are not only causing losses in the millions of dollars, but that the rationing of the fuel is preventing industry from planning future growth, and from building their own power plants to reduce costs and become more competitive.

“In a country where half the people are poor, we cannot allow a halt to the incipient growth that we have been registering in recent years,” Concamin said in a press release. The industry group called on the government for long-term solutions to Mexico's energy needs.

Mexico's Energy Ministry has said that additional natural gas will have to come through a liquefied natural gas terminal - meaning it will be much more expensive than the cheap natural gas supplies coming in from the US through a limited pipeline network- and that industry will have to agree to pay the higher price.

While Pemex is a major exporter of pricey crude oil, it is a net importer of natural gas and has been producing less natural gas in recent years as prices have fallen on booming US supplies of shale gas.

Cheap natural gas has also ratcheted up demand for the fuel in Mexico, and Pemex's imports of the fuel have risen sharply in recent months to try and meet demand.


Dow Jones Newswires



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