Page 5 - LatAmOil Week 46

LatAmOil COMMENTARY LatAmOil

And just a few days before Sempra announced country’s profile on global gas markets. On the
the FID, Mexican President Andres Manuel other hand, ECA LNG is keen on revenue gen-
Lopez Obrador floated another suggestion, say- eration and job creation, and it is reasonable to
ing that he might ask ECA LNG to do a favour assume that MPL has similar goals.
for CFE, the national power provider. Specif- According to Sempra’s statement, the pro-
ically, he proposed that the joint venture help posed export terminal will deliver on both
CFE dispose of excess volumes of gas that have counts. “Exports of LNG from ECA LNG Phase
been stored for use along the country’s western 1 are expected to improve the trade balances of
coasts. the US and Mexico,” the company said. “Its con-
CFE had acquired the gas in line with sup- struction is expected to create more than 10,000
ply contracts signed during the previous pres- direct and indirect jobs as a result of increased
idential administration, Lopez Obrador said. economic activity and social investments in
So far, though, it has not been able to use the both countries. Approximately 75 full-time jobs
gas, since most of the thermal power plants are expected to be added to the operations of
(TPPs) in those regions burn residual fuel oil, he ECA LNG.”
explained. At the same time, the Pacific LNG export
As of press time, it was not clear whether the projects also have the potential to benefit gas
Mexican government had secured ECA LNG’s producers in the Permian basin, which straddles
Texas and New Mexico. MPL has suggested that
agreement to either of the proposals mentioned the recently finished Wahalajara pipeline net- “
above – or to any other quid pro quo arrange- as Mexico receives more US-produced gas via The bill under
ment. Sempra did not mention the matter in its discussion has
statement on November 17. work, it could direct excess volumes of this gas
to the liquefaction plants for export. This option the potential to
Export capacity would help Permian operators by giving them
Third, the FID could mark the beginning of a an alternative to pipelines that lead to the Gulf make gas more
new era for Mexico’s gas sector. Coast or other US destinations.
To date, the country has not been much widely available
involved in gas exports. Instead, it has focused Spreading overseas throughout Brazil
on imports, in a bid to ensure that it covers Finally, the FID on ECA LNG represents an
domestic demand for fuel and energy. Now, advance for Sempra, as it marks an expan-
though, its territory may serve as a place where sion of the company’s LNG business beyond
gas from foreign or domestic fields can be lique- the US. Sempra currently has one operational
fied and sent westward to Asia, where demand export terminal in the US and has a further one
for LNG has been strong in recent years. planned.
Sempra and IEnova are certainly counting on Sempra owns a 50.2% interest in Cameron
this prospect. In fact, one of the two customers LNG on the Louisiana Gulf Coast, which began
that have agreed to buy 100% of the plant’s first- commercial operations in August 2019. The
phase production is Japan’s Mitsui. (The other facility consists of three liquefaction trains,
is France’s Total, which may eventually take an which came online one after another over the
equity stake in ECA LNG, the statement said. subsequent year, and has a total capacity of
Both companies have signed 20-year supply 12mn tpy. Illustrating the importance of Asian
agreements.) LNG buyers, most of the other partners in Cam-
The joint venture partners are not the only eron are Japanese companies – Mitsui & Co.,
parties to take notice of the potential for exports Mitsubishi and NYK Line – with France’s Total
to Asia. Mexico Pacific Ltd (MPL), controlled by also participating.
US-based Avaio Capital, is looking to build its Meanwhile, Sempra has also proposed to
own LNG export terminal in Puerto Libertad, build the Port Arthur LNG terminal on the
a city on the coast of Sonora State. Sarah Bair- Texas Gulf Coast. The first phase of that facility
stow, MPL’s chief commercial officer, said during would consist of two liquefaction trains, with a
Industry Exchange’s Sixth Mexico Gas Summit maximum combined capacity of 13.5mn tpy.
in September that the facility would use gas Port Arthur is one of a number of LNG pro-
imported from the US Permian basin to turn jects that were delayed earlier this year as a result
out as much as 12mn tpy of LNG. of the coronavirus (COVID-19) pandemic and
If these projects succeed, their investors will subsequent market downturn. Sempra said in
be able to export LNG at relatively low rates. This May that an FID on the facility was now antici-
is largely because the route across the Pacific pated sometime in 2021.
Ocean from Mexico’s western coast is shorter In a further blow, state-owned Saudi Aramco
than the routes used by US Gulf Coast produc- said in September that it would review an ear-
ers, which must transport their LNG through lier non-binding decision to buy a 25% interest
the Panama Canal in order to reach the Pacific. in Port Arthur, thought to be worth billions of
As such, ECA LNG and MPL hope to drum up dollars.
business by offering fuel at competitive prices. Sempra has not commented on what this
means for the project, especially since the deal
Economic benefits with Aramco also involves off-take from Port
The success of the projects could, in turn, give a Arthur. And the review does not guarantee that
significant boost to the Mexican economy. Aramco would back out, but it certainly appears
On the one hand, they could raise the to complicate the path towards an FID..” ™

Week 46 19•November•2020 www. NEWSBASE .com P5