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Mexico’s CFE and Sempra LNG agreements

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Mexico’s state utility, Comisión Federal de Electricidad (CFE), has reached preliminary agreements for LNG and natural gas infrastructure projects with Sempra Infrastructure, including a potential joint venture.

The liquefied natural gas and energy infrastructure arm of San Diego-based Sempra may create a partnership with CFE which would see the Guaymas-El Oro pipeline in Sonora rerouted as part of the agreement. Guaymas-El Oro, part of the 510 MMcf/d Sonora pipeline system owned by IEnova, has been out of service since 2017.

CFE has been looking for a partner to create a pipeline segment to supply gas-fired plants in Baja California State, Mexico.

Sempra says that the proposal also includes “a path forward” for its unsanctioned Vista Pacifico LNG terminal project at Topolobampo in Sinaloa State. Under the agreement, the parties agreed to define the project’s configuration to advance engineering and permitting.

Vista Pacifico could have an initial export capacity of 3-4 million metric tons/year (mmty). Sempra has been targeting equity partnerships to strengthen Mexico projects including Vista Pacifico. TotalEnergies recently took ownership of one-third of the project.

CFE and Sempra have already signed a tentative agreement to explore developing energy infrastructure and LNG solutions in Mexico to support the country’s economic development agenda. In the latest round of agreements, the companies are considering an LNG terminal in Salina Cruz, Oaxaca.

Sempra management said: “These development projects would allow CFE to potentially optimize the use of existing natural gas pipeline systems, provide additional sources of LNG supply for isolated markets in Mexico and continue to expand LNG supplies for the global market.

“The agreements reflect Sempra Infrastructure and CFE’s commitment to continue advancing energy infrastructure projects that enhance the region’s energy security, promote North America’s energy integration and foster economic growth and social wellbeing in the region.”

The Vista Pacifico and Salina Cruz agreements are preliminary and nonbinding and these development projects, together with rerouting the Guaymas-El Oro pipeline, remain the subject of a number of commitments still to be agreed.

These commitments may include feasibility studies, along with customer construction and partnership agreements, necessary permitting, financing, board approval and reaching a final investment decision.

In June, president Andrés Manuel López Obrador said he hoped a 500 MMcf/d pipeline to feed the project could be built within the year. The pipeline would span the Tehuantepec Isthmus, from Chinameca, Veracruz, to Salina Cruz.

LNG projects in Mexico by US firms, including New Fortress Energy and Mexico Pacific, are advancing, despite tension over Mexico’s energy policies.

Lopez Obrador has dismissed US allegations that his policies violate the United States-Mexico-Canada Agreement and unfairly tip the scales in favor of CFE and state oil company Petróleos Mexicanos.

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