Gas Pipeline Explosions Cost Mexico 100m Pesos Every Day

Text of report by Mexican newspaper El Financiero website on 12 July

[Report by Esther Arzate, Isabel Becerril, Francisco Flores, Esther Herrera, Luciano Vazquez: "100,000 Customers Lacking Natural Gas Supply"]

The economic losses caused by the explosions in the Mexican Petroleum (Pemex) pipelines on Tuesday 10 July were extended for a second day since natural gas was cut off in cities like Salamanca, Celaya, Silao, Leon, Guanajuato, Aguascalientes, Guadalajara, and Queretaro.

The effects were not selective: In addition to the Nissan and Honda plants in Aguascalientes and Guadalajara, two Vitro facilities, the ones belonging to the bathroom furniture company Ideal Standard, and Kellogg’s, hundreds of medium size companies stopped activities because of the lack of fuel.

They were all waiting for the total recovery of service, which according to Pemex will be in the early morning of Friday 13 July. Meanwhile, the progress being made by the state-owned company has been partial.

Victor Manuel Lopez Bolanos, national secretary of the National Association of Manufacturers (Canacintra), and Azael Cisneros Lara, the organization’s president of the chemical and parachemical industries, considered that in Guanajuato and Queretaro alone, the lack of natural gas supplies has caused losses to medium and large companies of up to 100 million pesos per day.

However, they recognized that they have yet to add the losses registered by the small companies and artisans’ workshops installed there. In all, they estimated that between 800 and 1,000 medium and large companies had had to stop operations because of a lack of fuel.

Lopez Bolanos explained that in the area of Bajio there are industries like tanneries and the companies that supply them: resins, pigments, and paints, as well as businesses dedicated to machining, electromechanics, automobiles (Silao), and textiles. The steel industry is also located there.

According to natural gas distribution companies, the suspension of supplies allegedly affected almost 100,000 industrial, commercial, and residential clients in the aforementioned cities. Residences represented 51,450, of which 9,000 are in Salamanca and 11,700 in Celaya.

Progress

Pemex reported that yesterday supplies had been normalized in Celaya and in Salamanca, Guanajuato, as well as anticipating that the same would happen in Queretaro today and on Friday in the west of the country.

The Mexican Natural Gas Association rejected the possibility that the lack of supplies might extend to other regions, given that the sections of the energy resource transport lines that were affected only supplied Bajio and the west.

In addition to the industrial sector, the losses also affected Pemex – which stopped supplying the energy resource and must invest in repairs – and gas distributors like Mexican Natural Gas, which operates in Guanajuato and Aguascalientes, and Tractebel, which operates in Queretaro and Guadalajara.

Yesterday Tractebel said that 10 per cent of its distribution services in Queretaro had already been reestablished.

Pemex reported that 200 Pemex workers are working on the repairs, preparing the bypasses that will be placed in each of the pipelines to resume energy supplies to Bajio as soon as possible. The state- owned company has finished laying the 14-inch diameter liquid petroleum gas pipeline and significant progress has been made on the 36-inch one, it stated yesterday.

Work has also been done to replace the affected stretch of the oil pipeline – which transported the petroleum that supplies the Salamanca refinery – and it was estimated that the mechanical work will conclude today, so tests can begin in the afternoon and supplies can then be resumed several hours later.

“Unfortunately, the suspension of services to some major consumers has been inevitable and it is hoped that supplies will resume by early Friday morning,” it lamented.

According to Mexican Natural Gas, the three large customers were affected in Salamanca, 21 in Celaya, 11 in Silao, 18 in Leon, 19 in Irapuato, Guanajuato, and 22 in Aguascalientes.

In addition to these, there are 26 industries that are major consumers receiving gas from Pemex Gas and Basic Petrochemicals, which are located in the Apaseo el Alto-Abasolo industrial belt in Guanajuato. They include Cobrecel, Agro, Crisoba, Igasamex, and the Bajio Steelworks, among others. Small consumers included 230 in Salamanca, 360 in Celaya, 250 in Leon, 60 in Irapuato, and 400 in Aguascalientes, for a total of 1,300.

Pemex asserted that supplies to small companies and domestic and social clients like hospitals continue at regular levels, thanks to the use of the product inventory that remained in the pipeline after the valves were closed.

Vitro reported that its two glass plants, located in Queretaro and Guadalajara, temporarily suspended operations and that the impact on cash flow will be $800,000 per day. Guillermo Dillon, director of the Nuevo Leon Chamber of the Manufacturing Industry, said that such events must come to an end because Mexico is allegedly at the beginning of a series of terrorist acts as a way for social forces to express themselves outside the law.

For his part, Pedro Ruiz, president of Canacintra in Queretaro, commented that Queretaro industries have operated at 75 per cent of their capacity.

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