Mexico Pacific pens 20-year LNG supply deal with Woodside

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 Australian LNG player Woodside.

Under the 20-year SPA, Woodside will offtake 1.3 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 for about 18 LNG cargoes per year includes volumes from the third train of Mexico Pacific’s Saguaro Energia LNG project with pricing linked to US gas indices.

Mexico Pacific said the SPA remains subject to the firm taking a final investment decision (FID) on the proposed third train which is expected in the first half of 2024.

Commercial operations are targeted to start in 2029.

The Saguaro Energia LNG project leverages “low cost” Permian Basin natural gas in the US and a Pacific Basin facing liquefaction site to deliver “more cost efficient” LNG for supply into the world’s largest LNG market, Asia without risk of the Panama Canal, the firm said.

Sarah Bairstow, president of Mexico Pacific, welcomed Woodside, one of the most established global LNG market participants, as a foundation customer of train 3, “further validating the value of west coast Mexican LNG.”

“As we deliver on our strategy, we aim to complement Woodside’s produced LNG supply with third parties’ volumes, giving us greater scale and portfolio flexibility to serve our customers, while optimising our LNG trading activities,” Woodside CEO Meg O’Neill said.

O’Neill said this agreement with Mexico Pacific delivers a new source of LNG into the company’s trading portfolio, expands its geographic diversification in the Pacific Basin and builds on the company’s presence in Mexico.

Contracts

Mexico Pacific recently awarded the engineering, procurement, and construction contract for the pipeline which will deliver natural gas to the proposed facility.

The 500-mile (850km) pipeline will be utilized as the primary natural gas supply path for the transportation of up to 2.8 Bcf/d natural gas from the US border to the first phase of Mexico Pacific’s 15 mtpa Saguaro Energia LNG export facility.

As per other LNG supply contracts, Mexico Pacific signed in August 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 and the deal includes train 1, 2, and 3.

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.

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