Mexico's First LNG Plant Faces Delays

The US energy provider, New Fortress Energy (NFE), has announced that the commissioning of Mexico's first liquefied natural gas (LNG) plant will be delayed until late October to early November, following the departure of the final piece of infrastructure required.

In late June, NFE announced it would expand its natural gas supply to various power generation facilities under CFE. Moreover, NFE announced the creation of an FLNG hub off the coast of Altamira, Tamaulipas, leveraging the underutilized pipeline capacity of CFE and enhancing Mexico's growing potential in the LNG sector.

A drilling rig, assembled at a shipyard in Ingleside, Texas, which is necessary to complete the 1.4Mt/y floating LNG plant off the coast of Altamira, Mexico, departed this week. Two other platforms had arrived in previous months.

NFE had initially planned to begin production in Altamira by the end of September, with the first shipments for exports expected in October. The company did not provide specific reasons for the delay. "Our projects are coming online after years of construction and we now look forward to cash generation, deleveraging and organic growth opportunities," said Wes Edens, President, NFE.

This LNG plant is a component of a broader initiative involving New Fortress and Mexico's state-owned power utility CFE. This collaboration aims to establish a US$1.3 billion hub to convert US and Mexican gas into LNG for exports. In line with this overarching objective, two more floating LNG plants are currently under construction, with operations anticipated to commence in 2025. The project’s primary goal is to produce LNG, which will be transported through the offshore pipeline known as South Texas-Tuxpan. 

New Fortress Energy Altamira is expected to liquefy natural gas on platforms located 15km offshore from the coast of Aldama and 25km from the Port of Altamira, Tamaulipas. This location provides logistical advantages for potential distribution both within Mexico and internationally. To facilitate this distribution, NFE could use the Golar Penguin ship, boasting a net capacity of 158,242m3 when filled with liquefied natural gas.

Furthermore, New Fortress secured approval from the Mexican government in June 2023 to export up to 7.8Mmt of LNG until April 2028. This authorization aligns with the company's prior approval from the US Department of Energy for exports to Mexico and other nations with trade agreements.

LNG exports have doubled since just five years ago (28.2%) thanks to the strong increase in European and Asian demand. This also coincides with the interest of US companies in establishing liquefaction points in Mexican territory to re-export US fuel to European and Asian markets, taking advantage of various strategic locations.