Backers of the Amigo LNG export project and the Mexican government have finalized the commercial framework for a 311-mile natural gas pipeline that would supply low-cost Permian Basin gas to the LNG terminal and power generation along the Pacific coast.
Singapore-based LNG Alliance chief executive Muthu Chezhian told Argus the parties reached agreement at a 25 June meeting on the 48-inch pipeline linking Guaymas to the Naco-Hermosillo corridor of the Sistrangas network operated by state-owned pipeline operator Cenagas.
"The contract structure has been worked out, the right-of-way is fully in place and the cooperation framework has been formalized, so this is a major milestone," Chezhian said. He added the line will run parallel to existing pipelines, avoiding potential land-rights disputes.
The agreement builds on a February memorandum of understanding between Cenagas and Freedom LNG, LNG Alliance's US subsidiary and the permit holder for future Mexican expansions.
The new pipeline would complement Amigo LNG's existing access to the Sistrangas system through the Trans-Pecos, Ojinaga-El Encino, El Encino-Topolobampo and Guaymas-El Oro pipelines, increasing available gas supply by as much as 3.2 Bcf/d for the LNG terminal and regional power generation.
Under the framework, Cenagas would operate the pipeline, while 30pc of transported gas would be reserved for Mexico's domestic market. Around two-thirds of that volume would supply the ports of Salina Cruz, Oaxaca, and Puerto Chiapas, with the remainder delivered to New Fortress Energy's Pichilingue LNG import terminal near La Paz, Baja California Sur.
"Safe to say, all domestic market needs on the west coast and emerging LNG bunkering demand will be addressed," Chezhian said.
Chezhian said a final investment decision could come as soon as next month if remaining conditions are met. The main outstanding issue is approval from the US Department of Energy on extensions to existing export permits, which he expects this month.
The project is also facing a court injunction issued by a Sonora judge last month following complaints from environmental groups. One legal source told Argus the latest injunction is nearly identical to one that was previously dismissed and, as such, is expected to be dismissed within two weeks.
Chezhian reaffirmed the timeline for the first 4.6mn t/yr liquefaction train to begin operations in the second half of 2028. Development of the second 3.6mn t/yr train would begin about six months after construction of the first starts.
