Mexico Pacific seals another LNG supply deal with Shell

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

Under the contract, Shell Eastern Trading will purchase 1.1 million tonnes per year from the third train of Mexico Pacific’s anchor LNG export facility, Saguaro Energia, located in Puerto Libertad, Sonora, Mexico.

Shell will buy the volumes from a unit of Mexico Pacific on a free on-board basis for a period of 20 years, according to a statement by Mexico Pacific.

3.6 million tonnes per year

This is the third SPA for the two firms as they announced a 20-year deal in July last year for 2.6 million tonnes per year of LNG from the first two trains of Mexico Pacific’s anchor LNG export facility.

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

“We are delighted Shell has chosen to grow with us, building upon their initial 2.6 mtpa commitment from train 1 and train 2, to also underpin more than 20 percent of train 3 capacity,” Ivan Van der Walt, CEO of Mexico Pacific said in the statement.

He said the project would provide Asia with “low-cost Permian gas, avoiding the Panama Canal to ensure a shorter shipping distance to Asia, to achieve lower transportation emissions, and landed pricing vs. the US Gulf Coast.”

“As we work to deliver a final investment decision (FID) on the first two trains, we are also closing out contracting across the significant commercial momentum in place for train 3 to ensure that a subsequent train 3 FID can follow as quickly as possible,” the CEO said.

Steve Hill, executive VP of energy marketing at Shell, said that LNG is “an increasingly important pillar of global energy security”, adding that investment in liquefaction projects is “needed to avoid a supply-demand gap that is expected to emerge in the late 2020s.”

ExxonMobil and Guangzhou Development Group

Earlier this year, Mexico Pacific signed two long-term LNG SPAs with a unit of US energy giant ExxonMobil.

Under the SPAs, ExxonMobil LNG Asia Pacific will purchase a combined 2 million tonnes per year of LNG on a free-on-board basis from the first two trains of Mexico Pacific’s anchor LNG export facility.

Besides Shell and ExxonMobil, the firm controlled by Quantum Energy Partners also signed a contract with China’s Guangzhou Development Group.

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