Mexico Pacific and Shell ink 2.6mn mt/yr SPA
Shell announced July 12 it has secured a 20-year sales and purchase agreement (SPA) to receive 2.6mn metric tons/yr of LNG from the first two trains of Mexico Pacific's proposed LNG liquefaction and export facility in Puerto Libertad.
The Puerto Libertad LNG facility is currently due on stream in 2026, starting with two 7mn mt/yr liquefaction trains in its initial phase. A third and fourth train will be added subsequently to bring Puerto Libertad to its slated 28mn mt/yr operating capacity.
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Puerto Libertad lies to the north of the Gulf of California, just 455 km by road from Tucson across the US border. The location should allow Mexico Pacific to transport Permian gas from the Waha trading hub in West Texas, while avoiding LNG shipments from east to west through the congested Panama Canal, reducing shipping times to Asian customers.
Mexico Pacific will supply Shell with LNG from Puerto Libertad on a free-on-board basis. Prior to the announcement, Mexico Pacific claimed it had signed memoranda of understanding for 14mn mt/yr of offtake from the facility, through agreements with two or more undisclosed parties.
Steve Hill, executive vice president of energy marketing at Shell, said: "Energy security remains paramount for the world. The demand for LNG is set to continue to rise with further LNG required to ensure security of supply and progress the energy transition. We look forward to continuing to work with Mexico Pacific as they advance to bring more LNG online.”