Mexico Pacific, the developer of the planned $14 billion Saguaro Energia LNG export project, has signed a long-term deal to supply liquefied natural gas to US energy giant ConocoPhillips.
Under the 20-year SPA, ConocoPhillips will offtake 2.2 million tonnes per year of LNG on a FOB basis from Mexico Pacific’s anchor LNG export facility, Saguaro Energia, located in Puerto Libertad, Sonora, according to a statement by Mexico Pacific.
The deal includes volumes from trains 1, 2, and 3.
ConocoPhillips also has an option to contract further expansion train volumes, Mexico Pacific said.
When fully operational, the first phase of the Saguaro LNG facility will have three trains with a combined capacity of 15 mtpa.
FID on first two trains
Prior to this deal, China’s Zhejiang Energy agreed to buy 1 mtpa of LNG for 20 years from the proposed project.
In March, Shell and Mexico Pacific signed another SPA for 1.1 million tonnes per year from the third train of Mexico Pacific’s anchor LNG export facility.
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.
Besides Shell, Mexico Pacific signed two long-term LNG SPAs with a unit of US energy giant ExxonMobil.
Under these 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.
Moreover, the firm controlled by Quantum Energy Partners also signed a contract last year with China’s Guangzhou Development Group for 2 mtpa of LNG.
“We are delighted to welcome ConocoPhillips as yet another world-class partner for trains 1, 2, and 3,” Ivan Van der Walt, CEO of Mexico Pacific, said in the statement.
“While our sales volumes exceed our train 1 and 2 FID requirements, we are excited to move into oversubscribed territory with one of the strongest Permian Basin and LNG market participants in the market – a validation of our project’s fundamentals and position, he said.
Walt added that the company’s focus is on delivering a final investment decision (FID) on the first two trains with train 3 to follow “shortly thereafter”.
Sarah Bairstow, president and chief commercial officer at Mexico Pacific, said the Saguaro LNG project is “the first project to have an initial FID independently anchored by three majors.”
“While trains 1 and 2 sales are now closed, we remain committed to providing further LNG supply to meet global energy security and energy transition needs and will now turn to execute against the contracting momentum in place for a subsequent train 3 FID as quickly as possible,” Bairstow said.
ConocoPhillips expanding LNG footprint
ConocoPhillips is heavily investing in its LNG business, including plans to become upstream operator of Australia Pacific LNG.
Last year, the firm signed LNG supply deals with QatarEnergy as well as with Sempra, and it also took a 6.25 percent interest in QatarEnergy’s 16 mtpa NFS LNG project and a 3.12 percent stake in the $28.75 billion NFE expansion project.
“ConocoPhillips is excited to pursue this opportunity with Mexico Pacific as we continue to focus on LNG market development to meet growing global natural gas demand,” Bill Bullock, executive VP and CFO at ConocoPhillips, said in the statement.
“Expanding our LNG footprint with agreements like this further enhances a balanced, diversified, and attractive portfolio as we progress our global LNG strategy,” Bullock said.