Mexico Pacific signs 20-year LNG supply deal with China's Zhejiang Energy
July 5 (Reuters) — Mexico Pacific Ltd has struck a 20-year deal to sell 1 million tons of liquefied natural gas (LNG) a year from its Saguaro Energia export plant in Sonora state to China’s Zhejiang Energy, it said on Wednesday.
Mexico Pacific CEO Ivan Van der Walt said in the company’s news release that LNG was “an important pillar” to China’s energy security needs.
“Zhejiang Energy is the sole gas distributor in Zhejiang province, one of the largest provincial economies in China,” he said. “Under this new agreement, Mexico Pacific will further support the growing energy requirements of this region.”
Mexico Pacific did not specify when the contract would start, or the pricing of the deal.
Zhejiang Provincial Energy Group is one of China’s so-called “second-tier” of LNG players, local government-backed city gas distributors that are joining the global gas market alongside the country’s dominant state traders like PetroChina and CNOOC.
Its deputy general manager Chai Xiqiang said the agreement with Mexico Pacific is an “important step” in further diversifying its energy supply portfolio.
(Reporting by Brijesh Patel in Bengaluru and Emily Chow in Singapore; Editing by Jan Harvey)
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.