Regional LNG: Mexico grants more permits for LNG terminals

Mexico's Energy Regulatory Commission, or CRE, has granted permits for three liquefied natural gas terminals, two on the Pacific coast and one in the Gulf of Mexico, the Energy Ministry was quoted by Dow Jones as saying Monday.

The ministry said the permits, one for a unit of Sempra Energy and two for units of Royal Dutch/Shell , bring to four the number issued to date.

Marathon Oil Corp. was issued a permit for a liquefied natural gas, or LNG, terminal near Tijuana, in Baja California, in April.

The Energia Costa Azul project, of San Diego-based Sempra, is for two 165,000 cubic-meter tanks and gas supply capacity of 1 billion cubic feet a day (BCFD), with investment of $669 million, the ministry said.

Sempra said it plans to begin construction in 2004 and start operations in 2007.

The CRE also issued Shell a permit for an LNG project in Baja California, the ministry said. It calls for two storage tanks of 170,000 cubic meters each, and capacity to supply 1 BCFD to the region, with expected investment of $747 million dollars and start-up in 2007.

The Altamira permit is for two storage tanks on the Gulf coast, each with a capacity of 150,000 cubic meters of LNG, and a pipeline connecting it to the national pipeline system.

The project is expected to involve investment of $370 million, and go into operation in late 2006. Its main customers will be power plants in the northeastern region of Mexico, the ministry said.

The state electric utility, the Federal Electricity Commission, or CFE, was expected to receive bids Monday for a gas supply contract for 500 million cubic feet a day of gas from Altamira via an LNG plant.

The local newspaper Reforma cited CFE's head of investment projects, Eugenio Laris, as saying the CFE would be happy to receive one bid.

That bid is expected to come from Shell, which already had plans for an LNG terminal at Altamira.

The Energy Ministry said Mexico's natural gas demand is expected to grow between 7% and 8% a year between 2002 and 2011, with growth led by the electricity and industrial sectors.

Mexico's natural gas imports have been racing ahead of production by state oil monopoly Petroleos Mexicanos, or Pemex, and imports are on the rise.

Imports averaged 733 million cubic feet a day in the first seven months of this year, reaching at 934 MMCFD in June.

Pemex currently produces 4.5 BCFD of natural gas, but hopes to expand output to 7 BCFD by 2007.(*)