Mexico Pacific and Shell Sign Third Long-Term LNG Sales and Purchase Agreement

Shell Eastern Trading (Pte) Ltd (Shell) and a subsidiary of Mexico Pacific Limited (Mexico Pacific) have signed their third long-term sales and purchase agreement for LNG. The deal calls for Shell to purchase approximately 1.1 million tonnes per year (MTPA) of LNG from the third train of Mexico Pacific’s Saguaro Energia LNG export project in Puerto Libertad, Sonora, Mexico.

The 20-year agreement expands upon Shell's initial 2.6 MTPA commitment from trains 1 and 2, bringing the total commitment from Shell to over 20% of the third train's capacity. When fully operational, the facility's first phase will have three trains and a combined capacity of 14.1 MTPA.

Mexico Pacific's CEO, Ivan Van der Walt, stated that the project would provide Asia with low-cost Permian gas, reducing transportation emissions and landed pricing compared to the US Gulf Coast. As the company works towards a final investment decision on the first two trains, they are also closing out contracting for train 3 to ensure that an FID can follow quickly.

Shell's Executive Vice President of Energy Marketing, Steve Hill, stressed the importance of investment in liquefaction projects to avoid a supply-demand gap expected in the late 2020s. The agreement with Mexico Pacific will help provide more LNG to the global market.

The Saguaro Energia LNG Facility plans to leverage natural gas from the Permian Basin. The LNG will have a significantly shorter shipping route, avoiding Panama Canal transit for Asian markets.