Tuesday, June 18, 2024

Texas puts temporary ban on gas exports; Mexico asks US for guaranteed supply

The federal government has asked the United States to guarantee the supply of natural gas after the governor of Texas placed a temporary ban on the fuel leaving the state to ensure power generators there have sufficient supplies amid an extreme cold snap.

Economy Minister Tatiana Clouthier said Wednesday she had contacted the United States’ top representative in Mexico – currently charge d’affaires John Creamer – to ask the U.S. government to guarantee natural gas supply to avoid an adverse impact on Mexican industry.

The state-owned Federal Electricity Commission depends heavily on natural gas imports from the United States to generate energy and supply industry.

In a Twitter post, Clouthier said Mexico is aware of the situation in the United States – millions of Texans were left without power this week as a deep freeze engulfed the Lone Star state – but warned that “if we don’t act together, the results could be more complicated.”

The economy minister took to Twitter again on Thursday to announce she had spoken to the United States government’s southern border coordinator Roberta Jacobson, a former ambassador to Mexico, about the impact the situation in Texas is having on Mexico and the U.S.

“Hand in hand we’re looking for immediate solutions,” Clouthier wrote without offering further details.

Mexico suffered a major power outage in the north of the country on Monday due to an interruption in the natural gas supply from Texas, where pipes froze. While power has largely been restored, gas supply has remained interrupted as Texas continues to face frigid temperatures.

Natural gas supply to major manufacturers has been drastically cut, undermining their capacity to operate if not stifling it completely. Volkswagen, General Motors, Kia Motors and Mazda all announced production suspensions at their Mexican plants due to the reduction.

VW said that production of its Jetta model would halt at its Puebla plant on Thursday and that work on its Taos and Golf models would stop on Friday. GM said that production at its plant in Silao, Guanajuato, stopped on Tuesday due to a lack of gas and wouldn’t restart until supply is fully reestablished. Kia shut down production in Pesquería, Nuevo León, for two days on Thursday while Mazda halted operations at its plant in Salamanca, Guanajuato, on Wednesday and is not scheduled to resume production until Saturday.

The existing supply problem was exacerbated when Texas Governor Greg Abbott announced Wednesday that he was placing a ban on gas leaving the state until February 21 to ensure Texas energy generators had ample supplies.

Citing the governor’s order, the top energy regulator in Texas told gas producers to offer supplies for sale in-state before sending shipments elsewhere.

With pipeline supply interrupted, Mexico has begun importing gas by sea from ports in California and Texas, and one shipload bound for Altamira, Tamaulipas, was leaving Freeport, Texas, on Wednesday, the news agency Reuters reported.

It was unclear whether additional shipments from Texas would be affected by the suspension imposed by Abbott, who said that a disaster declaration he issued on February 12 allowed him to put the ban in place even though it apparently violates the so-called commerce clause in the United States constitution that says that state governments cannot interfere in interstate and international trade.

Luz María de la Mora, Mexico’s deputy minster for foreign trade, said in a Twitter post Wednesday that the federal government doesn’t believe that the resolution announced by the Texas governor is “the only option,” adding that it would “irremediably” affect the Mexican and U.S. economies.

Source: El Economista (sp), Bloomberg (sp), El Universal (sp), Reuters (en)  

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