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López Obrador Ponders Selling Natural Gas to Asia

By Cas Biekmann | Wed, 08/12/2020 - 12:06

President Andrés Manuel López Obrador is considering granting private companies the ability to sell liquefied natural gas (LNG) to Asia, a step that could resolve a current oversupply of LNG that CFE is not able to use for its gas-based power plants, reported BN Americas. "There is surplus gas contracted and we have to find a way to use it because these are contracts that were signed and we have to respect them," said López Obrador during his daily press conference. A possible solution would be to allow private companies to market natural gas to Asia, focusing on filling gaps in demand in Japan. The president had Sempra Energy in mind to carry out this task, along with its Mexican subsidiary IEnova.

“IEnova has its plant in Ensenada and it wants to sell gas to Japan. But that same company is the one that sold us the gas in the Pacific, where the Yaquis gas pipeline runs," explained López Obrador, referring to the Topolobampo gas pipeline project. "Why do we care that gas reaches Topolobampo? Because there we can place a plant to treat gas and then sell the gas which we have in excess to Asia,” he explained.

Last week, López Obrador made a promise to the Yaquis community in the northwest of the country that he would divert the route of a gas pipeline, which passes through a part of their territory that they consider to be sacred, reported Energía a Debate.

BN Americas noted that Mexico has three LNG terminals: Altamira on the Gulf coast, Manzanillo covering the west coast and Energía Costa Azul, located on the northern part of Baja California Sur. Part of CFE’s oversupply comes from the government’s policy to use more fuel oil for power generation coming from state production company PEMEX. Mexico’s president explains that some of the gas was contracted by previous administrations with new thermoelectric power plants in mind, projects that never materialized. Even though the administration planned for more combined cycle power plants, it too had to be more selective in choosing which tenders would go through and which would be cancelled, reported S&P Global.

The idea of exporting LNG from Mexico to Asia is not new.  Private companies have already made efforts in this regard. IEnova, for instance, is seeking a long-term permit to be able to use its Energía Costa Azul facility for exactly this purpose.

The data used in this article was sourced from:  
BN Americas, Energía a Debate, S&P Global
Cas Biekmann Cas Biekmann Journalist and Industry Analyst