ExxonMobil, Mexico Pacific Sign LNG Sales and Purchase Agreement

ExxonMobil and Mexico Pacific signed two long-term Sales and Purchase Agreements (SPAs) for the sale of a combined 2MMTPA of LNG.

The contracts are on a Free on Board (FOB) basis. Under these SPAs, ExxonMobil will buy LNG over a 20-year period from the first two trains that will be built in the Saguaro Energia LNG plant, Mexico Pacific's main LNG export facility in Puerto Libertad, Sonora, Mexico. ExxonMobil also has the option for 1MMTPA from Train 3. 

“We have reached a critical point on contract volumes required for the final investment decision (FID) on our first two trains and will now shift focus to close contracting on the significant commercial momentum in place for a subsequent Train 3 FID. With natural gas playing a critical role in the quest for global energy security and the energy transition, we remain committed to supplying vital energy for decades. As we position for FID on the first two trains, we will also commence advanced engineering with Bechtel,” said Ivan Van der Walt, CEO, Mexico Pacific.

Wil VanLoh, Founder and CEO, Quantum Energy Partners, the controlling stakeholder of Mexico Pacific, said “Mexico Pacific’s unparalleled project fundamentals and highly experienced leadership team have established it as a premier LNG solution for customers and Permian producers to provide reliable and cost-effective LNG to support the energy transition.”

According to Mexico Pacific, the Puerto Libertad facility represents its “anchor project.”  "The Saguaro Energia LNG Facility, is a 3 train, 14.1MMTPA West Coast North American LNG export facility. The Saguaro Energia LNG Facility achieves significant cost and logistical advantages, including the lowest landed price of North American LNG into Asia, leveraging low-cost natural gas sourced from the nearby Permian Basin, and providing a significantly shorter shipping route that avoids Panama Canal transit for Asian markets,” the company added.

Last week, Exxon announced its 2022 results. The company’s 4Q22 earnings were US$12.8 billion, marking US$3.09 per share, which amounted to full-year earnings of US$55.7 billion. This represents the company’s highest historical growth, surpassing its previous record of US$45.22 billion in 2008. 

US president Joe Biden has targeted oil companies over the past couple of years for their environmental impact. After being confronted by Biden regarding the extraordinary profits in light of high oil prices, the company responded. “While our results clearly benefited from a favorable market, the countercyclical investments we made before and during the pandemic provided the energy and products people needed as economies began to recover and supplies became tight,” said Darren Woods, President, Exxon.

The agreement between Mexico Pacific and Exxon represents an important step in Exxon’s environmental plan. “LNG has an important role to play in helping society reduce emissions by enabling the delivery of lower carbon energy... We look forward to working with Mexico Pacific to continue growing ExxonMobil’s LNG portfolio and deliver Permian natural gas to global markets,” said Peter Clarke, Senior Vice President of LNG, ExxonMobil Upstream Company.