Regional LNG: "LNG a must for Mexico"
Tuesday, May 18 2004 - 03:30 AM WIB
Despite opposition by environmentalists and some lawmakers to plans by foreign oil majors to build LNG plants on Mexico's Pacific coast, Calderon said LNG could be crucial to save Mexico from a future power crisis.
"Mexico cannot depend on gas imported from the United States. We run the risk of cramping growth," Calderon told reporters on the sidelines of a Latin American energy forum.
"The United States has a significant deficit in natural gas and it's logical to think that in a moment of crisis the U.S. authorities will put their own consumers before Mexicans."
Despite sizeable resources, state energy monopoly Pemex has underinvested in natural gas, preferring to reserve its already strained investment budget for more lucrative oil projects.
With only 16 percent of "promising gas territory" explored to date according to Pemex, Mexico pays lofty market prices to import 15 percent of its gas needs from the United States.
That percentage is set to grow, costing Mexico more and increasing its dependency on its northern neighbour, as Mexico relies more on gas in the years ahead for power generation.
"It's vital that Mexico, in particular Baja California, diversifies its imports to not be dependent on North American gas but on cheaper gas from other countries, from Indonesia, Australia and Malaysia to Peru and Bolivia," Calderon said.
The Baja California peninsula, just south of the U.S. border on the Pacific coast, has no pipeline links to the rest of Mexico and is entirely dependent on U.S. gas imports.
Mexico is examining bids from several oil majors to build LNG plants in the area, including a Royal Dutch/Shell-Sempra Energy joint venture that is seen close to winning approval.
Despite concern that LNG plants could be targets for terrorists, analysts expect LNG to account for 11 percent of U.S. domestic gas supply by 2015, up from 2 percent now, with a similar trend seen in Mexico.
Pemex's gas chief, Marcos Ramirez, said he saw room for at least two LNG plants on the Pacific coast, one possibly at the southern port of Lazaro Cardenas. Mexico has already awarded Shell permits to build a plant at Altamira on the east coast.
He said Mexico was especially keen to firm up a deal to import LNG from Peru and Bolivia in particular, given their geographical proximity to Lazaro Cardenas. Both countries already have Mexico in their sights as a buyer of gas.
"We have been approaching different companies to explore the possibility that Peruvian or Bolivian gas could come to the west coast of Mexico," Ramirez said.
Mexico would then expand its pipeline network from the Pacific to the rest of the country, he told the forum, adding that he was looking forward to hearing presentations from the energy ministers of Peru and Boliva on Tuesday.
Peru aims to be exporting liquefied gas from its Camisea field to Mexico and the United States from 2009, after a land dispute pushed back an initial target date of 2007.
Bolivia's future gas exports hinge on a July referendum, after a plan to export gas via neighboring Chile, a traditional territorial rival, sparked protests that ousted Gonzalo Sanchez de Lozada as president.
Ramirez said Pemex would also push on with production of its own gas, with a tender for multiple service contracts for two remaining blocks in the Burgos gas field due this year.
Mexico has already awarded gas contracts for five other Burgos blocks to foreign companies, in a bid to get foreign investment in gas without breaching the constitution.
Ramirez said the remaining contracts would be sweetened, after the previous tender attracted a disappointing response.
"They're going to split one of the blocks into two, and there's going to be a new one too. We're talking about four more (blocks) for the second half of the year," he said.
Mexico hopes the contracts will increase Mexico's natural gas production by around 1 billion cubic feet per day by 2009.(*)