Mexico Pacific pens long-term LNG supply deal with Shell

A unit of LNG giant Shell has signed a long-term deal to buy liquefied natural gas from Mexico Pacific, the developer of the planned 14.1 mtpa Sonora LNG export project.

Under the contract, Shell Eastern Trading would purchase 2.6 million tonnes per year of LNG on from a unit of MPL on a free on-board basis for a period of 20 years, according to a statement by Shell.

Moreover, Shell said it would buy the supplies from the first two trains of MPL’s anchor LNG export facility located in Puerto Libertad, Sonora, Mexico.

When fully operational, the facility will have three trains and a combined capacity of 14.1 mtpa.

MPL previously said it plans to build the LNG export facility in three phases sourcing natural gas from the Permian gas basin in the United States.

The first phase includes one 4.7 mtpa liquefaction train, a tank, and a jetty, while the second phase consists of a second 4.7 mtpa liquefaction train and another tank.

The third phase completes the anchor project with a third 4.7 mtpa liquefaction train.

Prior to this deal, China’s Guangzhou Development Group signed a 20-year deal with Mexico Pacific for 2 mtpa of LNG.

GDD said in that statement that MPL plans to take FID for the first two phases in the second half of this year.

MPL, controlled by US investment firm AVAIO Capital, said in October last year it had signed a collaboration agreement with ConocoPhillips LNG Licensing, and Bechtel, working with Techint.

Commercial operations in 2026

Shell said in the statement on Tuesday that the facility is expected to start commercial operations in 2026.

Douglas Shanda, president and CEO of Mexico Pacific, welcomed Shell as a foundation customer at its anchor LNG facility.

“Their recognition of the advantages our location offers, including access to low-cost Permian gas, avoidance of the Panama Canal to ensure a shorter shipping distance to Asia, and lower landed pricing, demonstrates the value of West Coast North American LNG,” Shanda said in the statement.

Steve Hill, executive VP of energy marketing at Shell, said that “energy security remains paramount for the world”.

“The demand for LNG is set to continue to rise with further LNG required to ensure security of supply and progress the energy transition,” he said.

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