Sempra, CFE Join Efforts to Consolidate LNG Development

State electric utility CFE and Sempra Infrastructure, a subsidiary of the US company Sempra, announced several agreements to advance the development of natural gas infrastructure projects in Mexico. The joint venture aims to strengthen Mexico’s energy infrastructure and North America’s energy integration, boosted by growing opportunities in the international natural gas market.

The energy projects covered by collaboration deal include the proposed Vista Pacifico liquefied natural gas (LNG) project in Topolobampo, Sinaloa, the rerouting of the Guaymas-El Oro pipeline in Sonora and the potential development of an LNG terminal in Salina Cruz, Oaxaca.

The Guaymas-El Oro pipeline system has been inoperable since 2017 due to the damage it sustained on the back of a conflict with local Indigenous communities. To resume operations, the pipeline requires rerouting. Guaymas-El Oro is the second segment of an 800km line that was designed to supply US-sourced natural gas to CFE power plants that currently burn more polluting fuel oil.

CFE has been looking for a partner to create a pipeline segment to supply gas-fired plants in states isolated from the nationally-interconnected grid like Baja California. “These development projects would allow CFE to potentially optimize the use of existing natural gas pipeline systems, provide additional sources of LNG supply for isolated markets in Mexico and continue to expand LNG supplies to the global market,” Sempra’s management said.

Moreover, the deals include a proposal for “a path forward” for Sempra’s unapproved Vista Pacifico LNG terminal project at Topolobampo. Vista Pacífico could have an initial export capacity of between 3 and 4MMt/y.

CFE and Sempra have already signed a tentative agreement to explore developing energy infrastructure and LNG solutions in Mexico. In the latest memorandum of understanding (MOU) from early 2022, the companies were considering to jointly explore the potential development of an LNG terminal in Salina Cruz, Oaxaca.

The LNG terminal would complement the 500 MMcf/d pipeline project proposed by President López Obrador that would span the Isthmus of Tehuantepec, going from Chinameca, Veracruz, to Salina Cruz. The gas infrastructure in the Isthmus is fundamental to boost the Trans-Isthmic Corridor, one of the president’s key infrastructure projects.

“The agreements reflect Sempra Infrastructure and CFE’s commitment to continue advancing energy infrastructure projects that enhance the region’s energy security, promote North America’s energy integration, and foster economic growth and social wellbeing in the region,” Sempra’s statement read.

Both the Vista Pacifico and Salina Cruz agreements are “preliminary and nonbinding.” These commitments are subject to “feasibility studies, reaching definitive customer, construction and partnership agreements, securing all necessary permits, obtaining financing and incentives, receiving respective board approval, and reaching a final investment decision.” 

The deals come amid surging demand for natural gas around the world. The developments furthermore form part of Mexico’s efforts to strengthen its gas supply infrastructure. The country is also looking to promote itself as a key LNG export hub, moving from the Atlantic and Pacific coasts to Asia and Europe by taking advantage of the competitive gas prices in North America.

Aside from Sempra, LNG projects in Mexico include those under development by New Fortress Energy and Mexico Pacific Limited.