Image credits: Max Bender
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News Article

Mexico Could Be Next for New Fortress Energy’s Investment Plans

By Kristelle Gutiérrez | Mon, 06/13/2022 - 15:00

President Andrés Manuel López Obrador recently suggested that US firm New Fortress Energy is considering several investments in Mexico’s energy sector, which could add up to US$3 billion. At a time when natural gas prices seem to grow by the day, the possible new influx of capital could help strengthen Mexico’s global economic position regarding the clean-burning fossil fuel.

Among the many consequences that the Russian invasion of Ukraine created regarding global economic affairs, increasing natural gas prices are raising more concerns, as it has also coincided with rising temperatures and the general need of more air conditioning in the US. Natural gas prices stand currently at US$8.67/MMBtu, a decrease from the skyrocketing levels earlier in 2022 that rose above the $9.50/MMBtu reached during the economic crisis of 2008.

On 3 June, 2022, the president said that the potential New Fortress Energy’s projects included a liquefied natural gas (LNG) facility, and even alluded to the company’s Founder and Chief Executive, Wes Edens. “With this man alone, we are looking at US$3 billion,” said López Obrador when discussing potential energy investment in Mexico.

New Fortress was founded in 2014 and offers services regarding energy, logistics, financing, development and operation of infrastructure to transform heavy fuel oil and diesel assets into natural gas. It also develops brand-new gas-fired customized facilities that can combine heat with traditional power plant setups.

New Fortress’ first venture in Mexico dates back to July 2021, when the company started commercial operations in the state of Baja California Sur. At the port of Pichilingue, New Fortress began supplying natural gas to the CTG La Paz and CTG Baja California Sur power plants, as well as other local customers. At the time of the facility’s inauguration, Edens emphasized the relevance that the company’s development: “The delivery of more affordable and cleaner-burning natural gas is a significant milestone for Baja California Sur.”

Moreover, the supply of natural gas everywhere is threatened by increasing international prices, an issue that Mexico could suffer from as a net importer of natural gas. Mexican import levels from the US made up 87 percent of the country’s gas demand as of January 2022, according to a report by NGI. Conversely, PEMEX’s production of natural gas for domestic supply stands at 3 percent.

To successfully export LNG, companies like New Fortress are reliant imports, first, tying the issue directly to the development of the LNG facility. Nevertheless, many investors believe that Mexico could indeed become a successful exporter, even if the imports increase in price.

The data used in this article was sourced from:  
MBN, NGI, New Fortress Energy, Reuters, Trading Economics.
Photo by:   Max Bender
Kristelle Gutiérrez Kristelle Gutiérrez Junior Journalist & Industry Analyst