Mexico Pacific Limited Seeks Extension for Saguaro Energía

Mexico Pacific Limited, developer of the Saguaro Energía liquefied natural gas (LNG) export project, is seeking a seven-year extension of its export deadline from the US Department of Energy (DOE). The company filed the request stating it would be unable to commence commercial operations by the current December 2025 deadline due to "circumstances beyond its control." If approved, this extension would push the project's export start until 2032.

Mexico Pacific emphasized in its filing that it "has achieved, and continues to achieve, significant progress to meet the conditions necessary to achieve a final investment decision (FID) and commence plant construction." The Saguaro Energía project, located in Puerto Libertad, Sonora, Mexico, is expected to involve an investment of approximately US$15 billion. It is designed to transport, receive, liquefy, and export natural gas, sourcing shale gas from the United States and shipping it to Asian markets, bypassing the Panama Canal.

Launched in 2017, Mexico Pacific secured 14Mt/y of LNG sales agreements between 2022 and 2024 with major players including ExxonMobil, Shell, ConocoPhillips, Woodside Energy, and two Chinese buyers. This commercial progress was driven by global natural gas price spikes following Russia's invasion of Ukraine and the project's shipping cost advantages. However, the project has been slowed by internal challenges, including frequent changes in investors and executives, evolving project designs, and critical permitting errors.

According to the Institute for Energy Economics and Financial Analysis (IEEFA), external obstacles further complicate the project's momentum. Rising construction costs have prompted Mexico Pacific to seek higher liquefaction tolls from buyers to offset increased expenses. The timing of these contract renegotiations coincides with heightened trade tensions between the United States and its trading partners. China, for instance, ceased all imports of US LNG in early 2025 and reportedly directed Chinese firms against signing new US contracts, potentially impacting Mexico Pacific's deals with Zhejiang Energy and Guangzhou Development Group.

Furthermore, attempts by the United States to impose sweeping tariffs on Mexican imports raise the prospect of counter-tariffs, which could render Mexico Pacific’s US gas feedstock unaffordable or unavailable. Rising political tensions between the two nations could make gas trade a political flashpoint. The project also faces local opposition, with environmental groups raising concerns about its potential impact on the Gulf of California's marine life, citing risks from noise pollution, ship collisions, and potential gas spills. Additionally, the planned 500-mile Sierra Madre pipeline, which would transport Permian gas to the facility, faces security risks as it traverses areas with cartel influence. 

LNG Development in Mexico: Risks, Opportunities

The majority of US LNG export plants are on the Atlantic coast, making Europe a natural, direct, and relatively short destination and Mexico a strategic location for LNG development. However, European demand is not expected to grow significantly. Asia, conversely, is projected to be the primary source of new LNG demand in the coming decades, but the maritime journey from the US Atlantic coast to Asia is long and costly. According to IEEFA, shipping delays through key global chokepoints include up to 24 days via the Panama Canal, 32 days from the Suez Canal, and 35 days around the Cape of Good Hope.

This has led the US LNG industry to look to Mexico's Pacific coast. Mexico's Pacific ports offer a shorter and less expensive route to Asian markets, crucial given the expected demand growth there. Unlike the US West Coast, which lacks space for LNG plants and faces significant public opposition, explosion risks, and terrorist attack concerns, Mexico has deepwater ports in relatively unpopulated areas. Furthermore, Mexico's Pacific coast is near the Permian Basin, where US gas production has been increasing and prices have been low.

However, developing the LNG industry in Mexico presents risks. These include volatile natural gas prices, as the US may be running out of prime drilling sites. As the best wells decline, new, less productive wells are needed, potentially leading to higher gas prices sooner. Another major risk is increased dependence on US gas; Mexican LNG plants would source almost all their gas from the US, making them vulnerable to US trade conflicts, policy shifts, and extreme weather events like hurricanes or winter freezes. This exposes a growing Mexican LNG industry to factors beyond Mexico's control.