Midstream

Mexico to seize momentum on liquified natural gas

Mexico LNG

Mexico is on its track to seize momentum on liquified natural gas (LNG) demand; specially as a fourfold jump in spot Asian LNG prices has created a window for developers to build liquefaction projects, along the country’s pacific coast, S&P reports.

Firstly, with several LNG terminals stalled, delayed or even cancelled in the U.S. and Canada, right now is the perfect time for Mexican terminals to catch than demand in Asia; and to seize the strategic location the Mexican Pacific Gulf Coast has; that allows cargoes to take shorter routes to Asia and avoid the constantly congested Panama Canal.

Secondly, yet another advantage is the cheap U.S feed gas that Mexican projects feed on. However, a Platts JKM forward curve that suggests moderating end-user prices in early 2022 could narrow that momentum. The political environment in Mexico and hurdles that persist even after the energy regulatory reform that the country implement, could also add to that narrowing.

Thirdly, as we have reported previously, there is one major LNG project in Mexico under construction; Sempra’s liquefaction project at its Energia Costa Azul facility in Baja California, along the country’s Pacific Coast.

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Mexico Pacific Limited in talks to develop LNG terminal

Moreover, among other developer doing their thing are Mexico Pacific Limited, which has proposed an up to 12.9 million mt/year facility at Puerto Libertad in Sonora; also, Sempra, which is looking to develop a second project called Vista Pacifico at Topolobampo in Sinaloa.

Furthermore, Mexican government heralded a proposed export facility in Salina Cruz, also on the Pacific Coast; however, S&P Platts considers that the project is not currently feasible; because of the inability to source sufficient feedgas supplies.

On the other hand, Mexico Pacific Limited said in late January that it was in advanced discussions with customers in South Korea; Japan and also China about purchasing supplies from the proposed facility; and was on track to start closing binding agreements around the middle of the year.

Finally, no announcement have been made, however, commercial talks continue to have “great momentum.” The developer’s chief commercial officer, Sarah Bairstow, said in an email Aug. 26 responding to questions by S&P. “There is significant interest in our project due to our fundamentals; as we offer the lowest North American landed LNG price into Asia, given our strategic North American West Coast location.”

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