Shell Eastern Trading (Pte) Ltd (Shell) and a subsidiary of Mexico Pacific Limited (Mexico Pacific) announced today they have signed an additional sales and purchase agreement for Shell to offtake approximately 1.1 million tonnes per year (MTPA) of liquefied natural gas (LNG) from the third train of Mexico Pacific’s anchor LNG export facility, Saguaro Energia, located in Puerto Libertad, Sonora, Mexico.
Under the sales and purchase agreement, Shell will purchase LNG on a free on-board basis over a term of 20 years. When fully operational, the first phase of the facility will have three trains and a combined capacity of 14.1 MTPA.
“We are delighted Shell has chosen to grow with us, building upon their initial 2.6 MTPA commitment from train 1 and train 2, to also underpin more than 20% of Train 3 capacity,” said Ivan Van der Walt, Chief Executive Officer of Mexico Pacific. “Our project will provide Asia with low-cost Permian gas, avoiding the Panama Canal to ensure a shorter shipping distance to Asia, to achieve lower transportation emissions and landed pricing vs. the US Gulf Coast. As we work to deliver a final investment decision (FID) on the first two trains, we are also closing out contracting across the significant commercial momentum in place for Train 3 to ensure that a subsequent Train 3 FID can follow as quickly as possible.”
Steve Hill, Executive Vice President of Energy Marketing at Shell, said: “LNG is an increasingly important pillar of global energy security. Investment in liquefaction projects is needed to avoid a supply-demand gap that is expected to emerge in the late 2020s. We are pleased to be working with Mexico Pacific to provide more LNG to the global market.”
Chuck Davidson, Mexico Pacific Chairman and Partner at Quantum Energy Partners, said: “Mexico Pacific is uniquely facilitating the connection of low-cost Permian Basin gas with the lower carbon fuel needs of Asia to deliver de-risked and affordable new LNG supply, resulting in additional energy security for the region. “We are pleased to have the ongoing support of Shell, one of the largest market participants, to underpin investment in critically needed new supply.”