Delays hit Mexico LNG projects
Mexico had hoped that it could one day become the 4th largest LNG exporter in the world. But delays at several Mexico LNG projects put that vision in doubt.
Mexico’s hopes of building up a significant LNG export industry are losing momentum as major projects suffer delays.
Most of the proposed LNG projects in Mexico would use U.S.-sourced gas. The half dozen LNG projects proposed for Mexico’s Pacific Coast would import gas from the Permian basin in Texas. From the Pacific Coast in the Gulf of California, that gas would be liquified and put on a ship to be exported to Asia.
But several projects are facing significant setbacks. The 7.8-million-tonne-per-year Amigo LNG project located in Sonora, Mexico has quietly admitted that progress on the project has stalled. The backers of the project — the Singapore-based LNG Alliance — said the project would not start until the second quarter of 2028, according to its website. The startup date had previously been listed as November 2027, which was also a significant delay from the original target date of 2025. The news was first reported by BNamericas.
Worse, the delay could further complicate the status of the project’s permits. Because Amigo LNG is using U.S. gas, it needs a permit from the U.S. Department of Energy. The Amigo LNG export authorisation expires in December 2027. The project won’t be online by then, so it will need to reapply for a permit or obtain an extension from DOE, adding more uncertainty and risk.
The much larger Saguaro LNG project is also at a standstill, crippled by uncertainty and investor risk. As Gas Outlook reported in a two-part series, Mexico Pacific’s Saguaro LNG has failed to secure the roughly $15-$20 billion in financing it needs to build the project, despite having signed up customers for its export volumes.
Investors are balking at providing financing because the project’s construction costs are largely unknown. The final price tag for building a long-distance gas pipeline through the Sonoran Desert, large swathes of which are controlled by organised crime groups, is a big question mark. On top of that, political risk from the Trump administration’s trade war, along with competition for gas for the domestic market in Mexico, add several layers of uncertainty to the project.
The company repeatedly promised that an FID was imminent, most recently stating late last year that an FID would occur in early 2025. Those deadlines have come and gone. A green light is no longer considered likely, at least in the near-term. In a sign of how bad things are going, earlier this year Mexico Pacific’s CEO Sarah Bairstow left the company and took a position at Woodside.
On May 12th, Mexico Pacific announced its new CEO, Manuela (Nelly) Molina, would take over and would focus on the “next phase” of Saguaro LNG. Industry trade publication Natural Gas Intelligence reported that several Mexico LNG projects are facing longer odds, and may need to reimagine or redesign their projects. Analysts suggested that “smaller” projects might be more successful.
But with details lacking, and no sign of progress, Mexico’s LNG dreams may be on hold.
(Writing by Nick Cunningham; editing by Sophie Davies)