CFE reaches 20-year gas supply agreement with Saguaro Energía LNG

Mexico’s state Comisión Federal de Electricidad (CFE) has agreed to supply Mexico Pacific Ltd. LLC with natural gas for 20 years as feed for its 14.1-million tonne/year (tpy) Saguaro Energía LNG plant under development in Puerto Libertad, Sonora. CFE International, the company’s trading division, will supply Mexico Pacific with roughly 40% of its required supply via gas delivered from the Permian basin through CFE’s pipelines in Mexico.

Saguaro Energía will use three 4.7-million tpy trains. Mexico Pacific says the combination of low-cost US gas and a 60% shorter shipping distance to Asia (vs. cargoes leaving the US Gulf Coast) will allow it to deliver the lowest landed price of LNG into Asia from North America.

“Mexico Pacific will position Mexico as the fourth largest LNG exporting country…,” commented Mexico Pacific chief executive officer Ivan Van der Walt. “We will make an investment of $14 billion in Mexico, the largest foreign direct investment into Mexico to date, creating over 13,000 direct and 21,000 indirect jobs, without using Mexican natural resources.”

Oneok Inc. is targeting an early second-half 2023 final investment decision (FID) on its 2.8-bcfd Saguaro Connector pipeline. The 155-mile, 48-in. OD pipeline would run from the Waha hub to a border crossing in Hudspeth County, Tex., connecting there with a new pipeline under development in Mexico for gas delivery to Saguaro Energia.

Mexico Pacific expects to start receiving gas in 2026 and is targeting first LNG exports in 2027. It has signed two 20-year sales agreements with ExxonMobil LNG Asia Pacific for a combined 2 million tpy. The company also has deals in place with Shell PLC for 3.7 million tpy and Guangzhou Development Group Inc. for 2 million tpy. Mexico Pacific said earlier this year that it had “reached a critical point on contract volumes required for FID” on its first two trains (OGJ Online, June 5, 2023).