September 23, 2013 / 7:56 PM / in 4 years

UPDATE 1-Mexico slaps force majeure on hurricane-hit LNG terminal -source

By Oleg Vukmanovic and David Alire Garcia

LONDON/MEXICO CITY, Sept 23 (Reuters) - Mexican state power utility CFE has declared force majeure on imports into the Manzanillo liquefied natural gas (LNG) terminal after Hurricane Manuel damaged a pipeline, a source with knowledge of the incident said on Monday.

CFE spokesman Estefano Conde confirmed a “disruption” in a pipeline likely due to a mudslide at the port, but could not immediately provide additional information.

The line in question, the Guadalajara Pipeline, is owned by pipeline company TransCanada Corp and transports natural gas in a gaseous state to the terminal at Manzanillo.

The company said that service to its natural gas customers, both CFE and state oil and gas monopoly Pemex, on that section of the pipeline has been temporarily suspended.

“A pipe linking the terminal to the gas grid was damaged by Hurricane Manuel ... it has affected the unloading date of cargoes,” a source with knowledge of the matter told Reuters.

Cargo deliveries into the terminal may be delayed by at least one week, the source said, adding that the pipeline issue should be solved in that time.

“CFE announced the force majeure probably on Friday,” he said.

Mexico imports LNG at its Pacific coast Manzanillo terminal and the Gulf coast Altamira terminal to augment Mexico’s strapped natural gas supplies.

“It appears to be a line break,” Michael Barnes, a spokesman for TransCanada said in an email, adding that the company hopes to return the pipeline to service “as soon as possible.”

“We are in the process of determining the issue and the steps necessary to correct it,” he added, noting that the company has crews on the scene.

The natural gas that is not consumed for CFE’s LNG operations at the Manzanillo terminal is transported to state oil company Pemex, said Barnes.

He added that the line break posed no danger to the surrounding communities.

The damaged section of the TransCanada pipeline is located near the town of El Bordo, about 125 km (80 miles) inland from the port of Manzanillo, in Colima state.

The Manzanillo LNG terminal, with a capacity of 3.8 million tons a year, started operations last year, and is a owned jointly by Samsung C&T, Mitsui Trading, and Korea Gas Corp, the world’s biggest LNG buyer.

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