This is very, very interesting. Eyes have been on Mexico's oil company to improve their operations in the Gulf of Mexico. It turns out the company is improving its operations, but it is focused on oil, not natural gas, which is to be expected. But the unintended consequences is that Mexico is going to be more dependent that ever on US natural gas.
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From SeekingAlpha:
Furthermore, it is expected that SandRidge can gain from its natural gas production due to the fact that gas export to Mexico will more than double by 2016. The expected increase is from demand levels of 2 Bcf/d in 2013 to 2.2 Bcf/d in 2014, 3.5 Bcf/d in 2015 and will reach 4.5 Bcf/d in 2016. Mexico's production of natural gas is decreasing while the state-owned oil company, Pemex, is focusing on oil production, which means that there is not much growth expected in gas production.
However, demand for gas is expected to increase by 2.7 Bcf/d in 2018, of which 1.4 Bcf/d will be used in gas fired generation. State-owned Comision Federal de Electricidad has planned to increase its gas-fired generation capacity by 24.5 GW (from 2010 to 2025), which will further increase the demand for natural gas by 3.9 Bcf/d. The export of natural gas to Mexico will greatly help SandRidge in generating high revenues as the expected production of the company for 2014 is 102 Bcf and the projected increase in demand from abroad will push the price of natural gas upwards.Rounding the numbers, Mexico's natural gas demands will more than double by 2016:
- 2013: 2 billion cubic feet/day
- 2014: 2.2 bcf/d
- 2015: 3.5 bcf/d
- 2016: 4.5 bcf/d
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