Domestic Gas, Global Ambition: LNG in Development

Q: Ursus recently announced the start of engineering works for the LNG plant at Coatzacoalcos II. Can you walk us through the current stage of construction and what milestones you hope to achieve before the end of the year?

A: There have been fluctuations, as any experienced developer would expect, but the stage we are currently in, which is the FEED phase, is advancing rapidly. We expect to complete this stage by May or June of next year and move into the EPC phase, which includes engineering, procurement, and construction.

Our permits position us as one of the cleanest and most structurally solid LNG developments currently advancing in the market, with a more measured risk profile compared to other projects under way in Mexico. By the end of the year, we expect to be well established in this initial engineering phase, and we anticipate visible on-site activity as we close the year.

At the same time, we continue to move forward with environmental and social impact processes. One of the main challenges has been regulatory, particularly due to shifts in the legal framework. These changes have required us to adjust and restructure aspects of the project’s regulatory integration. We had anticipated many of these adjustments, since we have been closely monitoring updates issued by the authorities. Rather than representing setbacks, these changes have largely been positive, especially when compared with the way the previous administration handled these matters. The current administration is managing them more effectively, which has helped create a smoother development path for us.

Q: The facility plans to process 220MMcf/d of natural gas. Can you explain how you arrived at the split between export, local distribution, and internal consumption?

A: First, I would like to clarify that the figure refers to 220MMcf of feedstock. Output will be approximately 1.5 million mt/y of liquefied natural gas. We initially envisioned a smaller project of about 0.35 million mt, with roughly 47MMcf of feedstock. However, the National Center for Natural Gas Control, led by Cuitláhuac García, has expressed a strong interest in advancing President Claudia Sheinbaum’s natural gas agenda. As a result, discussions have progressed toward scaling up the facility in order to build a fully Mexican plant comparable to major facilities on the United States Gulf Coast.

This means we are now developing a medium to large scale project rather than a small facility, which aligns with the broader evolution of LNG infrastructure under development in Mexico.

As a concession holder, our company Ursus Energía e Infraestructura has responsibilities that extend beyond commercial objectives. While there is no written obligation, we operate as a socially responsible company aligned with the federal government’s economic and social development goals for the Isthmus of Tehuantepec. Because our project is located within the Interoceanic Corridor ecosystem, we determined that a portion of the plant’s output should be allocated to regional distribution.

Being based in the Port of Coatzacoalcos allows us to collaborate with commercial partners who are in the final stages of becoming offtakers. Through these partnerships, we will be able to move LNG not only within the Isthmus through the Interoceanic Railway, managed by the Navy, but also to regions that historically lacked access to natural gas. This is significant, as LNG has never been supplied to some of these areas.

We also intend to ship LNG to the Yucatan Peninsula to reinforce supply in coordination with major transport projects that are already advancing into operation. In addition, we plan to supply the Pacific Coast while new transport infrastructure, such as the Jáltipán duct and the Tapachula duct, is completed. For this reason, we are also seeking the concession for Tapachula II, which would allow us to install a regasification plant and strengthen support for federal public policy objectives.

This distribution strategy was shaped by a detailed market analysis and by our view of the plant as both an exporter and a peak shaving facility. This means that in periods of exceptionally high demand, when long-term contracts cannot be fully supplied due to production constraints or seasonal consumption shifts, our plant can serve as an emergency provider. This is particularly important during the winter months for Europe and during the southern hemisphere winter, when several South American countries experience high demand for LNG for power generation and heating.

Our financial and market analysis therefore examined not only international dynamics but also regional needs and the federal government’s policy objectives. This is how we defined the distribution between export volumes and domestic supply, and how we aligned the project with long-term market opportunities.

Q: Have you identified specific regions or potential clients for your exported product?

A: Regionally, we have identified the Yucatan Peninsula as a priority due to its significant natural gas demand. Existing pipeline infrastructure is insufficient to meet current needs, which creates a clear opportunity. Our commercial partners will manage the offtake, since our role is to deliver the molecule on a free on-board basis. We will soon announce the national and international companies that will operate alongside us.

Within Mexico, we are focusing on two other areas: Tapachula and the Isthmus of Tehuantepec. Our commercial partners will be responsible for deepening market development in those regions.

In Europe, our partners are prioritizing Central Europe due to strong demand and favorable commercial conditions. In South America, markets such as Brazil and Colombia are of interest because of their high consumption and the competitive pricing of Gulf Coast molecules compared to alternatives like Argentine supply. Ultimately, our partners will define the commercial strategy and contract structure as the project advances. We expect them to provide more detail once timelines and volumes become clearer.

Q: What impact do you expect Ursus operations to have in Coatzacoalcos and the surrounding development area, as well as on Mexican energy infrastructure more broadly?

A: A central principle of our project is the use of Mexican natural gas. The molecule we will liquefy is entirely domestic. This has a sustainability dimension, because a portion of Mexico gas production continues to be vented, contributing to methane emissions. Our intention is to capture that gas, process it, and monetize it. This reduces emissions and adds value to a national resource.

Working with domestic gas also simplifies regulatory processes because it avoids the need for permits such as non-Free Trade Agreement approvals from the United States. The main beneficiary of this model is the Mexican government, which owns the resource. Ursus benefits by executing the project, but the economic and environmental gains ultimately accrue to the State.

At the regional level, our development plan aligns with the policy framework of the Interoceanic Corridor. As concessionaires, we submitted a technical, economic, and social development proposal that goes beyond job creation. We want long-term, high-value employment that avoids the short-term model seen in many past projects in the southeast.

Our goal is to generate between 2,500 and 3,000 direct and indirect jobs across the development area. To sustain this, we created a foundation in partnership with the Mexico-Korea Foundation for training and research. Working with Seoul National University, the University of Central Florida, and regional institutions, we will train local talent and provide recognized credentials that enable workers to build careers in the LNG industry, whether with us or elsewhere. This is an investment in long-term social mobility, which aligns with national development goals.

Q: What is your approach to reach a successful project completion?

A: Our approach is based on learning from international experience. Projects around the world have faced social and environmental challenges, and those lessons are relevant. Long-term industrial developments must consider community impacts, sustainability, and emissions mitigation. Even our mere presence creates a carbon footprint, so it is our responsibility to manage it responsibly.

We chose to work within government-designated and analyzed development areas to ensure alignment with public policy. Despite the broader climate of skepticism toward government institutions, we saw a clear opportunity to collaborate under a defined regulatory and strategic framework. It has not been without challenges, but it has reinforced the value of partnership.

Regarding our long-term vision, we see ourselves as a complementary actor to Plan México rather than a central figure, since that framework prioritizes entities already included in the initiative. Nevertheless, we follow government policy and identify investment opportunities within it. Our objective is to demonstrate that collaboration with the government is viable, that investment in Mexico can be secure, and that projects can advance responsibly.

In the short term, we aim to consolidate our position as a significant LNG supplier in the Isthmus and the Bajío region. While pipeline transport faces security and operational challenges, demand persists, and alternative supply routes are available. We seek to be a constructive actor that supports broader industry leaders and contributes to reliable energy availability for industry and commerce.

In the medium term, we hope to become a driving force for regional development in the Isthmus, working closely with the government even as an external participant. Our goal is to demonstrate that impactful investment is possible outside traditional industrial hubs and that the south can attract long term projects when opportunities are opened and taken seriously.

Ursus Energy is a 100% Mexican company developing one of the country’s first liquefied natural gas (LNG) export plants. The facility is located within the “Coatzacoalcos II” Well-Being Development Hub, part of the Interoceanic Corridor of the Isthmus of Tehuantepec.