Australia’s Woodside Energy said on 6 December it signed a deal with energy company Mexico Pacific to purchase 1.3 mtpa of LNG for 20 years.
The oil and gas producer will buy LNG from Mexico Pacific’s Saguaro Energia LNG project on a free-on-board basis with pricing linked to US gas indices. Woodside said the agreement is consistent with its “strategic objective of building global scale and flexibility in its LNG portfolio.”
The project is in Puerto Libertad, Sonora, Mexico, and provides Woodside with proximity to key Asian markets, according to Meg O’Neill, Woodside's chief executive.
“As we deliver on our strategy, we aim to complement Woodside’s produced LNG supply with third parties’ volumes, giving us greater scale and portfolio flexibility to serve our customers while optimizing our LNG trading activities,” O’Neill said.
“This agreement with Mexico Pacific delivers a new source of LNG into our trading portfolio, expands our geographic diversification in the Pacific Basin, and builds on our presence in Mexico,” she said.
The sales and purchase agreement is subject to Mexico Pacific taking a final investment decision (FID) on the proposed third train at the Saguaro Energia LNG Project, according to Woodside.
The FID is expected to occur in the first half of 2024, and commercial operations are targeted to begin in 2029. The first phase of the Saguaro Energia LNG export facility, when fully operational, will have three trains with a combined capacity of 15 mtpa.
“We are delighted to welcome Woodside, one of the most established global LNG market participants, as a foundation customer of Train 3, further validating the value of west coast Mexican LNG,” said Sarah Bairstow, president of Mexico Pacific. “We look forward to continuing our collaborative relationship with Woodside to bring additional supply online to address critical energy security and energy transition needs.”
US independent ConocoPhillips also signed a deal with Mexico Pacific to purchase about 2.2 mtpa in aggregate of LNG across trains 1, 2, and 3 of the Saguaro Energia LNG export facility, the company announced on 3 August. According to Mexico Pacific, ConocoPhillips will purchase LNG on a free-on-board basis over a 20-term.
According to Mexico Pacific, the US Permian Basin will be the primary natural gas supplier. The company announced on 27 November that it awarded an engineering, procurement, and construction contract to GDI Sicim Pipelines and Bonatti for the 500-mile-long Sierra Madre pipeline project. The pipeline will be the primary supply path for transporting up to 2.8 Bcf/D of natural gas from the US border to the export facility.
