Mexico Pacific in close discussion with Chinese buyers – sources

HOUSTON (ICIS)–LNG developer Mexico Pacific Limited is in advanced discussions with prospective buyers, likely from China, as the proposed West Coast liquefaction facility looks to market its project, according to multiple market sources.

The proposed 14.1mtpa Saguaro LNG plant site is located in Puerto Libertad in the state of Sonora, Mexico.

Mexico Pacific has two binding, 20-year sales and purchase agreements (SPAs): one for 2mtpa with Guangzhou Development Gas Trading and another for 2.6mtpa with portfolio seller Shell.

Both were concluded in 2022 on a free on board (FOB) basis.

The project has not yet reached a final investment decision (FID).

Sources said that it was possible that the developer was close to securing another SPA with a prospective buyer from China, but the counterparty could not be immediately confirmed.

Zhejiang Energy, Beijing Gas and China’s State Power Investment Corporation (SPIC) were mentioned as possible buyers in active discussions.

Given Shell’s stance as a top-tier buyer for Mexico Pacific already, sources said that it was possible another portfolio company could be considering offtake as well.

In December 2022, US pipeline developer ONEOK filed to develop a cross-border pipeline known as the Saguaro Connector Pipeline in Hudspeth County, Texas.

Sources said this was likely the US-Mexico connector for the Saguaro LNG project, although this was not immediately confirmed.

Within Mexico, the Saguaro LNG project also would require a newbuild connector to the plant itself, if existing capacity held by state-run utility CFE could not be utilised.

Sources said Mexican infrastructure developer Esentia Energy Systems, formerly known as Fermaca, could potentially be tapped to develop this portion of the project. They also said, however, that the regulatory hurdles to get such a project completed would be substantial.

Mexico’s current federal administration has prioritised projects involving state-run utility CFE, the anchor customer for most of the new pipelines built into west Mexico. This prioritisation has proved to be challenging for companies that have sought permits to export LNG from energy ministry SENER, an entity that has struggled to update energy regulations in a timely manner in recent years. Mexico’s president has also publicly expressed a preference for projects that would benefit a state-owned company.

Additional reporting by: Yun Xie