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    End of cheap natural gas era predicted

    September 27, 2022 - CE Noticias Financieras


      Buying natural gas from abroad at 3 dollars per million BTU will be a thing of the past.

      For next year, the Ministry of Finance and Public Credit (SHCP) contemplates an average price for natural gas of 5.6 dollars per million BTU, i.e., 55.5 percent higher than the price established for 2022, which was 3.6 dollars.

      The factors that have had an upward impact on the price of the molecule are the recovery of demand, low gas production and the war between Russia and Ukraine, which has destabilized the price of all fuels.

      It is worth remembering that Mexico only produces 30 percent of the natural gas required, since the rest is purchased abroad, mainly in the United States.

      According to what is set forth in the Revenue Law initiative and the Federal Expenditure Budget Bill for the 2023 fiscal year, by the end of this year the estimate of the average price of natural gas was adjusted to 7 dollars per million BTU.

      Paul Sánchez, an expert in energy issues, explained that the high price estimated by the Ministry of Finance for natural gas next year is positive for public finances because it is the value with which the income from gas produced in the Country is calculated.

      "One thing is how it affects the industry, Pemex and CFE, and another how it affects public finances," he said.

      He also explained that the price is important because it is a reference of the cost that electricity will have, not only because of the domestic subsidy that is granted, but also because of the inflationary pressure on electricity prices that it could put on the industry.

      Regarding the way in which high gas prices affect the CFE, whose generation depends 60 percent on this input, Sanchez acknowledged that the Commission will pay more for fuels, but is restricted to charging only the previous increase due to last year's inflation.

      He recalled that as a result of the war between Russia and Ukraine, last February fuel prices were exposed to greater volatility, which put upward pressure on natural gas prices, causing this energy source to reach almost 10 dollars per million BTU in the Mexican market.

      This has affected not only the generation of electricity, but also the industry that requires the fuel for its productive activities, which in turn sees this increase reflected in higher production costs and therefore higher prices for its products and services.

      Onerous energy

      The Ministry of Finance contemplates a natural gas price close to 6 dollars per million BTU, almost 3 dollars more than what was established for 2022.

      FUTURE PRICES (Dollars per Million BTU)

      Sep-2022 5.52

      Oct 8.79

      Dec 9.00

      Feb-2023 8.73

      Mar 7.46

      Apr 5.89

      Source: Prontuario Estadístico Sener


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