Mexico Pacific and ConocoPhillips conclude long-term LNG deal
Mexico Pacific and ConocoPhillips conclude long-term LNG deal - Offshore Energy
Mexico Pacific and ConocoPhillips conclude long-term LNG deal
Mexico Pacific, a developer of the LNG export project in Puerto Libertad, Sonora, has signed long-term LNG sales and purchase agreements with the U.S. energy giant ConocoPhillips.
Under the agreement, ConocoPhillips will purchase approximately 2.2 million tonnes per year (mtpa) in aggregate of LNG across trains 1, 2 and 3 of Mexico Pacific’s anchor LNG export facility, Saguaro Energia.
When fully operational, the first phase of the facility will have three trains with a combined capacity of 15 mtpa.
ConocoPhillips will purchase LNG on a free-on-board basis over a term of 20 years with an option to contract further expansion train volumes.
“We are delighted to welcome ConocoPhillips as yet another world-class partner for Trains 1, 2 and 3,” said Ivan Van der Walt, Chief Executive Officer of Mexico Pacific. “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. We look forward to continuing the collaborative relationship we have with ConocoPhillips as we focus on delivering a final investment decision (FID) on our first two trains with Train 3 to follow shortly thereafter.”
Bill Bullock, Executive Vice President and Chief Financial Officer of ConocoPhillips, added: “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. LNG is a fuel that is crucial to providing reliable, lower-carbon energy for the long term. Expanding our LNG footprint with agreements like this further enhances a balanced, diversified, and attractive portfolio as we progress our global LNG strategy.”
Sarah Bairstow, President & Chief Commercial Officer at Mexico Pacific, noted: “We’re proud to be the first project to have an initial FID independently anchored by three majors. This unprecedented market milestone is a testament to our compelling ability to bridge competitive Permian Gas with the largest LNG market, Asia, free of Panama Canal risk and unnecessary incremental shipping emissions and costs when compared to the US Gulf Coast.
“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.”
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Related Knowledge Center: Liquefied natural gas
Driven by plentiful natural gas produced from shale plays, the United States began exporting liquefied natural gas in 2016 when the Sabine Pass terminal in Louisiana opened and shipped its first cargo. Since then, additional capacity, or trains, have been added to Sabine Pass, and terminals have become operational in Cameron Parish, La.; Hackberry, La.; Cove Point, Md.; and Corpus Christi, Texas. The Energy Information Administration projects that U.S. LNG export capacity will reach 8.9 billion cubic feet per day (Bcf/d) by the end of 2019, making it the third largest in the world, behind Australia and Qatar. The tariff war with China has the potential to impact some final investment decisions for additional terminals in the coming months.