Saguaro Energía LNG Terminal

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Saguaro Energía LNG Terminal, also known as the Mexico Pacific LNG Terminal, is a proposed LNG terminal in Puerto Libertad, Sonora, Mexico.

Location

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Project details

• Owner: Mexico Pacific
• Parent company: Q-LNG Holdings, LLC [38.2%], AVAIO MPL Special, LP [24.3%], DKRW Energy Partners, LLC [8.0%], other [29.5%]
• Location: Puerto Libertad, Sonora, Mexico
• Coordinates: 29.905838, -112.688038 (approximate)
• Type: Export
• Status: Proposed
• Capacity: 30 mtpa (six trains of 5 mtpa each)
  • Phase 1 (Saguaro Energía, Trains 1-3): 15 mtpa
  • Phase 2 (Saguaro Energía, Trains 4-6): 15 mtpa
• Start Year:
  • Phase 1: 2028 or 2029
  • Phase 2: TBD
  • Phase 3: TBD
• Cost: US$14 billion (cost for liquefaction plant and associated pipeline infrastructure; unclear what part of this figure applies specifically to the LNG terminal)
• Financing:
• FID status:
  • Phase 1: Pre-FID (late 2024 or early 2025)
  • Phase 2: Pre-FID
  • Phase 3: Pre-FID

Background

In March 2020 Mexico Pacific Limited (MPL) signed a Front End Engineering Design (FEED) contract with Technip USA to build a 12-mtpa LNG export terminal. In April 2020, MPL appointed Japanese investment bank Mitsubishi UFG as the project's financial advisor.

MPL originally stated its intention to take a final investment decision (FID) in early 2021, with operations commencing in 2024. The terminal was to be constructed in three phases, with each phase adding 4 mtpa of capacity.

In April 2021, S&P Global Market Intelligence reported that an FID was expected in late 2021 or early 2022, with exports starting by 2025. The anticipated FID was to cover the first two trains.

MPL subsequently increased the proposed size of each train to 4.7 mtpa, resulting in a total capacity of 14.1 mtpa for the three-phase project. According to the company website, Phase 1 was to consist of the first 4.7 mtpa liquefaction train, one tank and one berth; Phase 2 would comprise a second 4.7 mtpa liquefaction train and a second tank; and Phase 3 would include a third 4.7 mtpa liquefaction train.

In January 2022, MPL announced that it was doubling the originally proposed size of the project and planning for six 4.7 mtpa trains with a total capacity of 28.2 mtpa. The company reported that it had already secured agreements for supplying 14 mpta through memoranda of understanding with two or more parties, and expected to make its FID on the first two trains in the second quarter of 2022, with commercial operations to begin in the second half of 2025.

As the project has developed , Mexico Pacific has increased the proposed size for each train to 5 mtpa, and begun describing the Saguaro terminal as a two-phase project, with Phase 1 and Phase 2 comprising 15 mtpa each.

In July 2023, Mexico’s state Comisión Federal de Electricidad (CFE) reached a deal with Saguaro Energía LNG to supply the project with gas for 20 years. Gas supplied by CFE International, the company’s trading division, will amount to 40% of the project's required feedgas.

In August 2023, MPL said it was aiming to start construction of the first two liquefaction trains before the end of 2023 and that it would take four years for these to come online. Construction of the third train would likely start at some point in 2024, with the terminal then expected to be operational by 2028, when it will start servicing offtake deals with Shell, Exxonmobil, Guangzhou, and Zhejiang Energy.

In October 2023, MPL's vice president of corporate finance, Tyler Kruse, reiterated that a final investment decision (FID) on Trains 1 and 2 was imminent and could be expected before the end of 2023. In March and April 2024, multiple news outlets again reported that the company expected to make an FID imminently.

However, as of August 2024 the project remained stuck in the pre-FID phase, with the following text on the company's website unchanged since July 2023: "Initial FID is focused on Trains 1 and 2, with Train 3 to follow in quick succession." In April 2024, outside sources reported that the company was "close to taking an initial final investment decision for the first two trains," but by July 2024, the projected FID date for Phase 1 had slipped to "either the second half of 2024 or early 2025."

The terminal’s gas supply would be contingent on construction of the 250-kilometer Saguaro Connector Pipeline in the US and the 800-kilometer Sierra Madre Gas Pipeline in Mexico, with anticipated start-up dates no earlier than 2027 and 2028, respectively.

The lack of progress towards an FID, and the multi-year time frame required for the new pipelines and new LNG terminal construction in general, coupled with the US Department of Energy's "export commencement deadline" of December 14, 2025 for the Saguaro terminal made it clear that the project would require a permit extension from the DOE in order to move forward.

Sales & purchase agreements with customers in the Asia-Pacific Region

As of September 2024, Mexico Pacific had signed nine 20-year sales and purchase agreements with customers in the Asia-Pacific region, accounting for 14.1 mtpa, or nearly the entire capacity of the Saguaro terminal's first three export trains.

Confirmed 20-year LNG Supply Contracts - Saguaro Energía LNG Terminal

Company	Amount Contracted	Contract Date
Guangzhou Development Group (China)	2 mtpa	March 2022
Shell Eastern Trading (Singapore)	2.6 mtpa	July 2022
ExxonMobil LNG Asia Pacific (Singapore)	2 mtpa	February 2023
Shell Eastern Trading (Singapore)	1.1 mtpa	March 2023
Zhejiang Energy (China)	1 mtpa	July 2023
ConocoPhillips (Australia, China, Malaysia)	2.2 mtpa	August 2023
Woodside (Australia)	1.3 mtpa	December 2023
ExxonMobil LNG Asia Pacific (Singapore)	1.2 mtpa	January 2024
Posco International (South Korea)	0.7 mtpa	August 2024

In April 2022, Mexico Pacific confirmed that it had signed a 20-year deal to supply 2 mtpa of LNG from the Saguaro Energía terminal to China's Guangzhou Development Group; under terms of the deal, 1 million tpa would be supplied from each of the terminal's first two trains.

In a May 2022 interview with S&P Global, Mexico Pacific reiterated that it had secured contracts with multiple Asian LNG importers, and expected to make an FID on trains 1 and 2 during the second half of 2022. Asian and European customers were said to be competing for LNG volumes from train 3, partly in response to supply shortages provoked by the Russia-Ukraine conflict.

In June 2022, after receiving a key permit from the Mexican government, Mexico Pacific announced that it hoped to make an FID by September 2022, which would put the project on track to begin commercial operations as early as 2026.

In July 2022, Shell announced that it had signed a 20-year sales and purchase agreement with Mexico Pacific; under terms of the contract, Shell will become an anchor customer for the new terminal, offtaking 2.6 mtpa (million tonnes per annum) of LNG (liquefied natural gas) from the terminal's first two trains.

In February 2023, Mexico Pacific announced that ExxonMobil LNG Asia Pacific had agreed to purchase an additional 2 mtpa of LNG from trains 1 and 2 over a 20-year period, while simultaneously securing an option to purchase 1 mtpa from the Saguaro terminal's third train. Mexico Pacific CEO Ivan Van der Walt noted that the volumes covered under the new contracts were sufficient for the company to make an FID on the Saguaro terminal's first two trains, and that Mexico Pacific would now shift its focus to finding additional clients for its proposed third train.

In March 2023, Shell confirmed that its affiliate Shell Eastern Trading had signed a new 20-year purchase agreement for an additional 1.1 mtpa of LNG, to be supplied from the Saguaro terminal's third train.

In July 2023, Mexico Pacific confirmed that it had signed yet another 20-year agreement to supply 1 mtpa from the Saguaro Energía terminal to China's Zhejiang Energy, with the first shipment to be delivered in 2027.

In August 2023, Mexico Pacific announced that ConocoPhillips had signed a 20-year sales and purchase agreement to offtake 2.2 million mtpa from Trains 1, 2 and 3 combined, further bolstering the project's viability.

In December 2023, Woodside signed an agreement to purchase 1.3 mtpa from Train 3 over a 20-year period. Mexico Pacific stated in a press release that the company expected to make an FID on Train 3 within the first half of 2024.

In January 2024, ExxonMobil LNG Asia Pacific added momentum to the terminal's prospects by signing a new 20-year agreement to purchase 1.2 mtpa from Train 3.

In August 2024, Mexico Pacific confirmed yet another agreement, to supply 0.7 mtpa of LNG over a 20-year period to Korea-based POSCO International.

Evolving size of the project

As of early July 2023, Mexico Pacific's website showed that the Saguaro Energía project was to be developed in two phases: an initial phase encompassing two 4.7 mtpa liquefaction trains, two tanks and one berth; and a second phase incorporating a third 4.7 mtpa train. The website made no mention of the previously proposed trains 4 through 6, although some industry analysts continued to include this 14.1 mtpa expansion phase in their forecasts, with an anticipated FID date of 2024.

By late July 2023, the wording on Mexico Pacific's website had been changed to incorporate the expanded six-train project. The website referred to the first three trains as "Mexico Pacific's anchor project, Saguaro Energía... with commercialization of Trains 1-2 complete and Train 3 under final negotiations." The next three trains, now listed with a total capacity of 15 mtpa, were described as "Saguaro Energía II."

As of September 2024, the Mexico Pacific website changed its wording again, removing any mention of Saguaro's second phase (Trains 4-6) in the written description of the Saguaro terminal and referring to it as a 15 mtpa export facility. However, a video embedded on the same web page continued to announce the company's plans to eventually double capacity to 30 mtpa.

Opposition

Numerous citizens' groups in Mexico, including Greenpeace, Nuestro Futuro, Alianza Mexicana Contra el Fracking, Conexiones Climáticas and Planeteando have called for the government to cancel all pending LNG export terminal projects in the country. The groups argue that LNG terminals create a host of serious negative impacts for local communities, including health effects from toxic chemicals such as benzine and nitrogen oxides, climate change associated with heightened levels of greenhouse gas emissions, devastation of marine life due to dredging, and the associated negative economic impacts on fisheries.