Mexico’s growing network of natural gas pipelines will turn a profit under new management by 2021, the system’s manager said, following decades of underinvestment by state-owned oil company Pemex.
The two-year-old natural gas pipeline administrator CENAGAS was put in charge of some 5,600 miles (9,000 km) of natural gas pipelines following a 2013 energy reform that ended Pemex’s decades-long monopoly.
“We want to have a business that starts to be very profitable,” David Madero, the director of CENAGAS, said in an interview late on Monday.
He said the system will stop losing money no later than 2021 as maintenance costs decrease.
CENAGAS, which will manage new pipelines as well, eventually expects to manage a pipeline network that totals about 12,400 miles (20,000 km) by 2019.
While about $20 million will be spent on maintenance this year, that figure is expected to more than double to 1 billion pesos ($53 million) annually beginning in 2017.
“All Mexican natural gas pipelines have maintenance problems,” said Madero. “There are things we have to update, things we have to repair.”
CENAGAS will pay Pemex about 1 billion pesos after September, he added, the first in a series of negotiated payments to reimburse the oil company for an estimated 9 billion pesos worth of pipeline assets it is giving up.
Madero said the agency has yet to decide whether it will reimburse Pemex by raising funds through an investment trust known as Fibra E, which allows the issuance of securities backed by assets.
He said he expects to hire a financial adviser later this year to help clarify the relative advantages of using such a trust as opposed to “a simple securitization.”
Madero said regulated natural gas transportation rates should raise about 4 billion pesos ($213 million) per year, and allow the agency to grow from about 160 employees to as many as 350 by the end of 2017.
The agency, however, is still evaluating how it will oversee operations.
“We want to see if we really have to operate the pipelines, or if we can have operators in the field that operate apart from Pemex but on our behalf,” he said.
Source: Reuters (Reporting by Natalie Schachar and David Alire Garcia; Editing by Alan Crosby)