Latin America Advisor
Energy Advisor
A Publication of The Dialogue
Would a $5 Billion LNG Export Hub Be Viable for Mexico?
Mexican President Andrés Manuel Lopez Obrador on Sept. 27 announced plans to build a liquefied natural gas (LNG) export hub in Veracruz state to meet European demand for gas. The initiative is estimated to cost as much as $5 billion. Mexico has already proposed eight liquefied natural gas projects as it strives to become one of the world’s top exporters of the fuel, despite importing most of its natural gas. Is the new export hub economically viable and sustainable? What is the expected timeline for this project, and where will its funding come from? Will Mexico be able to import enough natural gas to then export?
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Raquel Bierzwinsky, partner at Norton Rose Fulbright U.S. LLP: “There are three key issues in determining whether this proposed facility in Coatzacoalcos can be built and be successful. First is the ability to contract adequate offtake in Europe. While Europe has dire needs for gas at this moment, its sources of energy will be significantly different in five to seven years, the time that it takes to develop, build and reach the commercial operation date on a liquefaction export terminal. Europe is already planning for alternative sources of energy and is aggressively contracting with U.S. LNG suppliers. Second, the supply of LNG must come from the United States, so the project will need to find LNG supply and transport it to Mexico. It will also have to compete with the U.S. LNG facilities that already have a competitive economic advantage, given their location and the reduced risk of transportation of the natural gas. The pipelines that will need to transport the gas to the proposed Coatzacoalcos facility need to be built. Third, with the current investment climate in Mexico, it could prove difficult to…”
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A sister publication of the Inter-American Dialogue’s daily Latin America Advisor, the weekly Energy Advisor captures fresh analysis from business leaders and government officials on the most important developments in oil and gas, biofuels, the power sector, renewables, new technologies, and the policy debates shaping the future of energy in the Western Hemisphere and beyond. To subscribe or for more information, contact Erik Brand, publisher of the Advisor, at ebrand@thedialogue.org.
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