Shell, Mexico Pacific Sign LNG Long-Term Supply Agreement

Mexico Pacific Limited (MPL) signed a 20-year agreement with Shell for the supply of liquefied natural gas (LNG) from its proposed liquefaction facility on the Pacific coast of Mexico. The agreement follows a previous LNG supply deal between the two companies in November 2021.

Under the new agreement, Shell will purchase an additional 1.1Mt/y of LNG from MPL's liquefaction plant, which is currently under construction. The facility, which is expected to start operations in 2024, will have a production capacity of 14.1Mt/y.

“We are delighted to learn Shell has chosen to grow with us, building upon their initial 2.6Mt/y commitment from train 1 and train 2, to also underpin more than 20% of the capacity of train 3,” said Ivan Van der Walt, CEO, Mexico Pacific. 

MPL's liquefaction facility will be strategically located to serve Asia, the Americas and Europe, offering competitive access to the Pacific Basin's growing demand for LNG, Van der Walt added. The facility will use proven liquefaction technology and will be designed to meet the highest environmental and safety standards.

The new agreement also underscores Shell's commitment to advancing the energy transition by providing cleaner energy solutions that meet growing global demand, while reducing greenhouse gas emissions. LNG is a vital component in the transition to a lower-carbon energy future and this partnership is a significant step toward achieving that goal.

“LNG is an increasingly important pillar for global energy security. Investment in liquefaction projects is needed to avoid a supply-demand gap that is expected to emerge in the late 2020s. We are pleased to be working with Mexico Pacific to provide more LNG to the global market,” commented Steve Hill, Executive Vice President of Energy Marketing, Shell. 

The agreement between Shell and MPL is expected to enhance energy security, drive economic growth and create new opportunities for trade and investment in Mexico and beyond. The development of MPL's liquefaction facility represents a significant milestone in the advancement of Mexico's energy industry and will enable the country to play a more prominent role in the global LNG market.

According to a report by GlobalData, Shell was at the forefront of long-term LNG import contract volumes signed by major purchasing companies in 2022 with a contracted capacity of 6.7Mt/y.