Mexico’s nascent LNG market may very well be impacted by the choice of U.S. authorities to pause export licenses as they assessment methodology and tips.
The liquefied pure fuel export initiatives deliberate in Mexico, which quantity to as a lot as 6 Bcf/d, would use U.S. pure fuel as feed inventory. As such, they require U.S. Division of Power (DOE) approval for exports to nations that lack free-trade agreements (FTA) with the USA.
NGI’s Mexico GPI spoke to LNG builders and individuals within the pure fuel market to get a way of potential ramifications. The initiatives most clearly impacted have but to obtain DOE permits. Nevertheless, even Mexico LNG initiatives which have U.S. authorizations may very well be compelled to hurry up plans or face reapplying for permits beneath unknown tips.
New Fortress Power Inc.’s Altamira LNG venture doesn’t but have DOE authorization for exports to non-FTA nations.
Altamira’s first section consists of two 1.4 million metric tons/yr (mmty) trains offshore Tamaulipas hoisted on jack-up rigs. The advertising and marketing arm of Mexico’s Comisión Federal de Electricidad (CFE), CFEnergía, would provide feed fuel for the models from the Agua Dulce hub in South Texas through the Valley Crossing pipeline. CFE would transport these volumes on the Sur de Texas-Tuxpan pipeline.
The venture is greater than 95% full and commissioning is imminent.
U.S. Customs and Border Safety issued a ruling that the transportation of LNG produced offshore Altamira by non-U.S. certified vessels wouldn’t violate the Jones Act. This might imply that the ability may ship pure fuel to Puerto Rico or probably even the U.S. Northeast, which lacks pipeline capability to satisfy areas of excessive demand.
Mexico Pacific Ltd. LLC has a non-FTA DOE allow, however there are different items of the puzzle that should be in place, together with new pipelines. It’s unclear how the allowing pause impacts pipeline export initiatives. Furthermore, Mexico Pacific’s export allow runs out on the finish of subsequent yr, that means it must apply for an extension with DOE.
The Saguaro Energía LNG export terminal in Puerto Libertad on the Sonoran coast would have a mixed capability of 14.1 mmty, or 1.86 Bcf/d, throughout three trains.
The Sierra Madre pipeline feeding the plant would run from the U.S. border and traverse the Mexican states of Chihuahua and Sonora. On the U.S. aspect of the border, Oneok Inc. is awaiting the LNG venture’s closing funding determination (FID) to proceed with the two.8 Bcf/d Saguaro Connector pipeline, which might join the Waha hub in West Texas with Sierra Madre in Mexico.
“Mexico Pacific already holds DOE authorization (FTA and non-FTA),” a spokesperson instructed NGI. “We stay on monitor, and dedicated, to taking a near-term prepare one and two FID with prepare three to comply with shortly.
“As an LNG venture positioned in Mexico, Saguaro Energía is uniquely positioned to supply diversified and lower-cost LNG from North America, freed from Panama Canal congestion and different uncertainties,” the spokesperson mentioned. “As such, we stay dedicated to our additional progress plans, totally assured we are going to proceed to obtain future regulatory approvals for our progress initiatives.”
The Amigo LNG venture in Guaymas, Sonora, being developed by Singapore-based LNG Alliance Ltd. additionally has DOE authorization. LNG Alliance CEO Muthu Chezhian instructed NGI’s Mexico GPI the Biden administration’s determination to pause new permits wouldn’t influence the venture for now.
Amigo LNG has authorization for a terminal with 7.8 mmty of capability throughout two trains.
“We aren’t impacted. That’s excellent news,” Chezhian mentioned. “Generally it’s good to not be No. 1 within the race. Fortunately, we utilized fairly late. We bought our permits in December 2020, so our authorization to begin is legitimate till December 2027, which provides us an export window till 2047.”
Maybe greatest positioned is Sempra’s Vista Pacífico venture in Topolobampo, Sinaloa, which has a sound DOE allow till late 2029. In late 2022, DOE permitted Sempra’s request to export 200 Bcf/y to non-FTA nations from Visa Pacifico.
In the meantime, Sempra’s 3 mmty first section of Energía Costa Azul is presently beneath building in Baja California with exports set for subsequent yr.
Chezhian of Amigo mentioned the allowing pause “is sending shockwaves in Asian markets.” He added, “It’ll have a broader geopolitical influence.”
Others have urged a possible reputational knock on North American LNG.
“Japan, the world’s second largest LNG importer, already has expressed some concern about Biden’s short-term moratorium, and I definitely anticipate this may result in extra inquiries about Mexican LNG exports,” NGI analysis director Patrick Rau mentioned. “Saguaro LNG is getting near reaching FID, however there probably gained’t be a rush to finalize different initiatives in Mexico till after the elections.”
Presidential elections are scheduled in June for Mexico and in November for the USA. Market individuals urged to NGI they anticipate the pause to carry till at the very least till 2025.
“Throughout this era, we are going to take a tough take a look at the impacts of LNG exports on power prices, America’s power safety, and the environment,” President Biden mentioned final week. “This pause on new LNG approvals sees the local weather disaster for what it’s: the existential menace of our time.”
DOE Secretary Jennifer Granholm mentioned the pause was short-term, however DOE has not offered a timeline for the way lengthy authorizations could also be curtailed.
“Asia’s most important purpose is power safety,” Rau mentioned. “Most, if not all LNG exported from Mexico, would come from the U.S., and routing fuel by way of Mexico introduces an additional component of threat importers could in any other case search to keep away from. These are long-term contracts, some as many as 20 years, so a number of additional quarters gained’t essentially kill the attractiveness of those initiatives.
“But when after December it’s clear that the U.S. remains to be anti-LNG exports, and/or if the brand new president of Mexico is much less smitten by LNG exports than Mexico President Andrés López Obrador, that might probably drive LNG importers into securing provide from different components of the world.”
At the least 17 amenities have pending authorizations on DOE’s backlog. Rapidan Power Group’s Alex Munton instructed NGI that the moratorium would probably influence the event of 10 North American initiatives anticipated to be fed with U.S. fuel, representing nearly 20 Bcf/d of extra export capability.
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