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Mexico Launches Its First Gas Price Index

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Mexico’s energy regulator has announced the first publication of a natural gas wholesale price index for the first time since introducing sweeping energy reforms, with more regional indices on the way.

The index will come out monthly and will be based on wholesale transactions on the local gas market, made up of a national average of all such transactions as reported by gas marketers every month.

The index aims to help efforts to boost liquidity in Mexico’s nascent natural gas market. As liquidity improves, the index will become increasingly specific, including regional data or liquidity segmentation.

Eventually, the index will reflect daily natural gas prices, as the energy watchdog works to provide all market participants with more transparency to stimulate trade.

According to guidelines the regulator, CRE, approved last week, the IPGN index will also include the price per molecule and the cost of delivery. It will be updated on CRE’s website 15 days after the end of each calendar month.

The index "will enable natural gas market participants to have more information to make better decisions and indicators on the dynamism of the Mexican natural gas market," the watchdog said, adding it used best international reporting practices from existing gas index reporters, to provide local gas traders with access to an international base for comparison.

Related: The Caribbean Is Poised To Become The Next Major Oil Region

Currently, gas marketers in the country are obliged to submit daily and monthly reports on their transactions. The purpose is to collect data on day-ahead spot market sales and the reporting system has been in place since the end of last year but it was only last month that traders could start actually reporting transactions, after a capacity reservation regime came into effect.

The regulator said it expected private reporting agencies to emerge at some point and when they do, the CRE could stop publishing the IPGN, which, it noted, is not meant to serve as a mandatory reference price.

By Irina Slav for Oilprice.com

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