MEXICO CITY/NEW YORK (Reuters) – Oil trading firms, including Trafigura, are supplying Mexico with emergency cargoes of liquefied natural gas (LNG) to overcome a power crisis caused by interrupted U.S. natural gas supplies, three sources close to the purchases said.
Mexico’s state-run power company Comision Federal de Electricidad (CFE) last week resorted to LNG imports as natural gas supplies from the southern United States, especially neighboring Texas, were hit by frozen pipelines and rocketing prices caused by a cold snap.
The trading companies were able to divert LNG cargoes going to Asia while offering Mexico unsold cargoes that were anchored off the U.S. Gulf Coast, the sources said, even though Texas Governor Greg Abbott temporarily restricted out-of-state gas supplies, primarily affecting Mexico.
Trafigura declined to comment on the matter. Mexico’s energy secretary and CFE did not reply to requests for comment.
The first two LNG cargoes bought by CFE discharged last week at Mexico’s Manzanillo and Altamira ports on tankers Flex Courageous and Seri Balhaf, respectively, according to Refinitiv Eikon vessel tracking data.
CFE officials last week said that at least two more cargoes were purchased to address the emergency, but the company has not revealed the names of the suppliers or terms agreed.
Mexico’s President Andres Manuel Lopez Obrador last week said that the Latin American country ended up paying less for the LNG it bought than imports that could have been made through pipelines amid the U.S. gas price spike.
Lopez Obrador said that Mexico was asked to pay up to $100 per million British thermal units (mmBtu) for piped gas from the United States.
It was cheaper to buy LNG last week even though most of the super-cooled fuel is based on benchmark prices at the U.S. Henry Hub in Louisiana, which spiked to a record high of $23.86 per mmBtu on Feb. 17.
Vitol, the world’s largest independent oil trader, is not among the firms supplying Mexico with LNG this time, two of the sources said.
The commercial arm of Mexico’s state-run oil company Pemex in December suspended its commercial relationship with Vitol after the U.S. Justice Department found that a subsidiary of the trading firm paid bribes to Pemex employees in exchange for lucrative contracts.
In Brazil and Ecuador, investigations on company executives from Trafigura and Vitol have followed the U.S. probe, sometimes leading to local lawsuits.
Reporting by Marianna Parraga in Mexico City and Devika Krishna Kumar in New York; additional reporting by Adriana Barrera in Mexico City and Scott Disavino in New York; Editing by Marguerita Choy