New Natural Gas-Focused Projects Announced in Salina Cruz

The Government of Mexico will invest MX$120 billion (US$5.81 billion) in the construction of a natural gas liquefaction plant, as well as a coking unit at the refinery in Salina Cruz, Oaxaca, announced President Andrés Manuel López Obrador during a visit to the region. A new pipeline is also in the works.

The president pointed out that this would translate to thousands of jobs, to the benefit of the people in the region. To ensure adequate midstream capability, he explained that the government is working on the construction of a gas pipeline that would go from Coatzacoalcos, Veracruz to Salina Cruz. State-owned electric utility CFE, which is overseeing both projects, must still obtain the necessary Right of Way for the pipeline, however.

"We have a gas contract that enable us to have sufficient supply to export to Asia, but we have this in the Gulf of Mexico and need a gas pipeline so that a liquefaction plant can be built here, in Salina Cruz," he specified.

President López Obrador said the construction of the gas pipeline will be carried out within a year, and a tender to build a plant dedicated to exporting liquefied natural gas (LNG) to countries in Asia will begin as soon as the pipeline is set. The president mentioned two additional commitments in the region: the modernization of the ports of Salina Cruz and Coatzacoalcos, as well as the rehabilitation of the railway system that will offer cargo and passenger services around the Interoceanic Corridor of the Isthmus of Tehuantepec, which will also feature ten industrial parks.

“All these public investment works are going to remain in the hands of the Ministry of the Navy (SEMAR)… because we want them to defend the assets of the people and the nation. Then, a single company will be created, which will report to SEMAR,” López Obrador added.

However, some analysts have considered the project to be unfeasible due to Mexico’s insufficient domestic natural gas production, since PEMEX is consuming most of these resources for its own internal processes, and importing gas is becoming increasingly costly. Even with sufficient infrastructure in place, the transportation prices would make it difficult for the terminal to be competitive, experts argue. In order to make these projects thrive, substantial improvement in the current gas infrastructure from the Northern border to the Southeast of Mexico is required.