Mexico LNG export venture looks for CFE gas agreement

Source: Heren

2019/03/13

HOUSTON (ICIS)--A venture to export LNG from Mexico’s west Coast is seeking to complete a deal with state-run utility CFE for part of its gas supply from the US and utilise CFE’s pipeline capacity, should the developer and CFE reach an agreement.

Houston-based Mexico Pacific Limited has attracted start-up capital from AECOM Capital, an investor and developer of infrastructure.

The site is located in Puerto Libertad on the Pacific Coast in the state of Sonora, about 160 miles, or 257km, from the US border.

Funds also have been contributed by US-based Och-Ziff Capital Management.

Mexico Pacific Limited did not respond to requests for comment before publication.

The venture said that the project is permitted for up to 12mtpa of LNG production, although this was when the site was first zoned for imports.

Mexico Pacific Limited said on its website that the first 2mtpa to 4mtpa will be targeted using modular-based technology.

Permitting is still required for the project within Mexico.

The project has a permit from ZOFEMAT, La Zona Federal Maritimo Terrestre, or the offshore maritime agency, according to the developer but other requirements would still need to be sought.

Permitting from the environmental regulatory agency SEMARNAT has not been completed.

Approvals on the US border

The project has advanced with approvals from the US side of the border, where natural gas from the Permian and other shale basins will be sourced for the Mexican export project.

The US Department of Energy (DOE) granted approval for the project to export US gas to Mexico for liquefaction purposes in December 2018 over a 20-year period. The non-free trade agreement (non-FTA) export application was submitted in June 2018.

Supply from CFE, other marketers

Mexico Pacific Limited’s feedgas route would include the Sierrita Gas interstate pipeline near the US-Mexico border at Sasabe, Arizona, according to its US DOE filing.

Mexico Pacific Limited, at the time of the September 2018 order, stated that it was in the process of concluding a gas supply agreement with Mexico’s state-run utility CFE for 400,000 Dekatherms/day, for delivery through CFE pipeline capacity to the US border and then through the Ienova pipeline to the facility.

CFE has the first 770 million cubic feet (mcf)/day of capacity on the Sasabe-Guaymas IEnova pipeline, which was completed in 2014.

The developer said that Mexico Pacific Limited also would source gas from third-party gas producers.

The approval bodes well for other Mexican export ventures looking to sell LNG originating from US-sourced gas.

US-based utility Sempra is developing its own Mexican liquefaction project by expanding the existing Costa Azul LNG terminal in Ensenada, Baja California.