Mexico Pacific has secured sales and purchase agreements with ConocoPhillips for the offtake of an aggregate of approximately 2.2 million metric tons per year (Mtpa) of liquefied natural gas (LNG) across trains 1, 2, and 3 of Mexico Pacific’s anchor LNG export facility, Saguaro Energia.
Under the sales and purchase agreements, ConocoPhillips will purchase LNG on a free on-board basis over a term of 20 years and has the option to contract further expansion train volumes, according to a news release from Mexico Pacific Thursday.
The first phase of the Saguaro Energia facility, located in Puerto Libertad on the west coast of Mexico, will have three trains with a combined capacity of 15 Mtpa when fully operational, Mexico Pacific said in the release.
“We are delighted to welcome ConocoPhillips as yet another world-class partner for Trains 1, 2, and 3”, Mexico Pacific CEO Ivan Van der Walt said. “While our sales volumes exceed our Train 1 and 2 FID [final investment decision] 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 on our first two trains with Train 3 to follow shortly thereafter.”
“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”, ConocoPhillips Executive Vice President and Chief Financial Officer Bill Bullock said. “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.”
“We’re proud to be the first project to have an initial FID independently anchored by three majors”, Mexico Pacific President and Chief Commercial Officer Sarah Bairstow said. “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.”
Earlier in July, Mexico Pacific and Sonora’s state government signed a collaboration agreement supporting the Saguaro Energia. As part of the agreement, the government of Sonora has pledged to “pave an efficient path” for building the project, including the continued timely issuance of state and municipal permits, according to a separate news release.
According to Mexico Pacific’s website, the Saguaro Energia LNG Facility will achieve significant cost and logistical advantages resulting in the “lowest landed price of North American LNG into Asia” by leveraging low-cost natural gas sourced from the nearby Permian Basin and a significantly shorter shipping route, avoiding risks from Panama Canal transit for Asian markets.
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