Friday, June 21, 2024

US-based Mexico Pacific announces plans to invest another US $15B in Mexico

Houston-based company Mexico Pacific Limited (MPL) has announced another investment of US $15 billion in liquefied natural gas (LNG) projects in northern Mexico in the next two to three years, the firm’s CEO Sarah Bairstow told the El Financiero newspaper.

The planned outlay will increase the LNG company’s investment in Mexico to $30 billion, which El Financiero said was the highest amount ever for a single investor in this country. The figure is equivalent to over 80% of Mexico’s total foreign direct investment in 2023.

Mexico Pacific has already begun investing $15 billion in a natural gas pipeline and liquefaction plant in the northern states of Sonora and Chihuahua. Those projects have been approved and construction is expected to start later this year.

In an interview with El Financiero, Bairstow said Mexico Pacific will spend the additional $15 billion on a range of unspecified liquefied natural gas (LNG) projects. However, she did say that the company wants to move into an expansion phase once it has built the gas pipeline and liquefaction plant.

She said that Mexico Pacific is “excited” about Mexico’s future under Claudia Sheinbaum’s leadership, given that the president-elect has a PhD in energy engineering.

Bairstow, who was appointed CEO of MPL in April, said that the company has been supported by federal and state authorities during the past six years as it prepares to build its projects in Sonora. She indicated that she expects that support to continue after Sheinbaum takes office on Oct. 1.

A portrait of Sarah Bairstow, Mexico Pacific LNG's new CEO.
MPL’s new CEO, Sarah Bairstow, was appointed in April. (Mexico Pacific)

MPL’s existing plans in Mexico 

On its website, Mexico Pacific describes its planned liquefaction plant as the company’s “anchor project.”

The natural gas export facility will be located on the Gulf of California coast in Puerto Libertad, a town in the municipality of Pitiquito, Sonora. MPL subsidiary Saguaro Energía will operate the facility.

The company already has a deal to sell 1 million tonnes of LNG per year over a 20-year-period to Chinese company Zhejiang Energy. It also has deals to sell LNG to three “oil majors,” Bairstow said.

MPL’s other major project is the Sierra Madre pipeline, an 800-kilometer-long pipeline that will transport gas extracted in the United States “from the U.S.- Mexico border in the municipality of Guadalupe, Chihuahua,” to Puerto Libertad, according to the company’s website.

“The pipeline will traverse through 16 municipalities across the states of Chihuahua and Sonora, terminating at Puerto Libertad, Pitiquito, Sonora,” MPL says.

Bairstow told El Financiero that Mexico is in a privileged geographical location due to its proximity to the Permian Basin, an oil and gas producing area in western Texas and southeastern New Mexico. Oil producers extract huge quantities of gas in the Permian Basin as part of the oil-drilling process.

A map of the Permian Basin in Texas, a major source of LNG.
The natural gas projects will use the by product of drilling in the Permian Basin to create liquefied natural gas (LNG). (U.S. Energy Information Administration)

With the construction of the Sierra Madre pipeline, Mexico will be able to access natural gas from that basin at the world’s lowest prices, Bairstow said. In coming years, she added, it could become the world’s fourth largest LNG exporter.

“We already have all the necessary permits and we’ll be building infrastructure in Mexico for the next five or 10 years,” she said.

Bairstow said that MPL’s projects will create 13,000 direct and 21,000 indirect jobs “during the different phases of construction.”

Mexico Pacific’s big-league buyers

The MPL CEO told El Financiero that there are three keys to the success of the company’s projects in Mexico.

The first one she cited was “customers.”

Bairstow said that MPL has already entered into 20 and 30-year contracts to sell LNG to different customers. Three of those companies are oil majors — ExxonMobil, Shell and ConocoPhillips.

“It’s the first project in the world that is anchored to three ‘super majors,'” Bairstow said.

She said that MPL has already made deals to sell all the LNG that will be produced by the first three LNG trains, or liquefaction units, at the Puerto Libertad facility.

“Mexico and Sonora have an advantage of proximity to the Asian market, which has led to a phenomenal amount of demand [for the gas liquefied] by our project,” Bairstow said.

The total capacity of the plant in its initial stage will be 15 million tonnes of LNG per year.

Bairstow said that the second key to the success of the Mexico Pacific projects was government support. The CEO reiterated that things have been going smoothly thus far.

Chihuahua Governor Maru Campos and Mexico Pacific representatives signed a strategic agreement last November, just one of MPL's government collaborations.
Chihuahua Governor Maru Campos and Mexico Pacific representatives signed a strategic agreement last November, just one of MPL’s government collaborations. (Mexico Pacific)

“We have all the permits for the project and we also have a strategic partnership with the Federal Electricity Commission. We have a wonderful collaborative relationship and have appreciated its support,” she said.

With permits granted, construction is set to begin this summer

Bairstow said that the third key to the success of the projects were the contractors who will help execute them. She said that the companies that collaborate on the construction of the liquefaction plant and pipeline will ensure that they are “the most advanced” of their kind in North America.

Bairstow estimated that the projects would take between four and five years to complete. She also indicated that MPL would subsequently move into an expansion phase, presumably using the additional $15 billion in planned investment.

Construction of the liquefaction plant and pipeline will begin at the end of summer, according to El Heraldo de México journalist Carlos Mota, who met with Bairstow this week.

In a post to her LinkedIn account on Thursday the MPL chief said she was “proud” to outline to Mota “the conscious design and lasting benefits this world-class energy infrastructure will deliver for Mexico, the U.S.-Mexico bilateral relationship and our global stakeholders.”

With reports from El Financiero

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