Mexico Pacific and ConocoPhillips strike 2.2 mtpa SPA for LNG offtake

UPDATE: Adds comment from Sarah Bairstow, President and Chief Commercial Officer at Mexico Pacific

LNG plant developer Mexico Pacific Limited (MPL) announced on Thursday that it has signed a sales and purchase agreement (SPA) with ConocoPhillips for the latter company to offtake a total of 2.2 mtpa from Saguaro Energia, a proposed LNG plant in Puerto Libertad, on the west coast of Mexico. The latest SPA means that 71% of the total offtake capacity from the proposed plant has been booked, with only ~1.5 mtpa of term capacity remaining on Train 3, MPL has confirmed to Gas Matters Today.

Under the terms of the SPA, ConocoPhillips will buy LNG on a free-on-board (FOB) basis over 20 years from all three trains of the project’s first phase. It appears that, since the last update one month ago, the nameplate capacity has been increased from 14.1 mtpa to 15 mtpa.

The latest SPA means that the MPL has so far sold over 71% of total capacity, or 10.7 mtpa, putting the project on path for final investment decision (FID) later this year.

The firm’s CEO Ivan Van der Walt, said in a statement: “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 an on our first two trains with Train 3 to follow shortly thereafter.”

Sarah Bairstow, President and Chief Commercial Officer at MPL told Gas Matters Today that the FID on Train 1 and 2 will be taken later this year, with FID on Train 3 expected within six months. The plant is scheduled to be operational by 2026. Baistow added that the firm has sold out all term volumes for Trains 1 and 2 and that ~1.5 mtpa was remaining on Train 3.

In addition, there has been an increase in capacity from the initial 14.1 mtpa: "Following detailed engineering awarded to Bechtel in January this year, we have achieved a re-rate in the production of the facility. The resulting nameplate for each train is now 5 mtpa," Bairstow said.

The existing collaborative relationship that Van der Walt referred to includes the agreement the companies signed in October 2021 with the aim of ConocoPhillips supporting MPL and Bechtel in designing LNG trains for the MPL LNG project using the Optimised Cascade process (CP Pro), the firm’s proprietary liquefaction technology.

The announcement comes hot on the heels of the Sonora state government recognising the project as a “foundational pillar” of the Sonora Plan, which seeks to promote clean energy development, investment, and economic prosperity for the benefit of Sonora and Mexico.

Among other things, the state government has committed to continue paving the way for construction of the project, including issuing state and municipal permits.

Saguaro Energia says it aims to bring natural gas from the Permian basin to the largest LNG market, Asia, by avoiding the Panama Canal and incremental shipping costs as well as reducing emissions and delivery time when compared with the facilities on the US Gulf Coast.

Panama Canal bottlenecks have come back on the radar as Cheniere’s COO Corey Grindal told LNG2023 last month that the firm was shunning the route when transporting LNG to Asia because due to a months-long drought that led to delays and depth restrictions for the largest ships crossing the canal. - JS