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July 13, 2022

Shell signs 20-year deal to purchase LNG from Mexico Pacific

Shell will buy 2.6 million tonnes of LNG a year from the first two trains of Mexico Pacific’s anchor LNG export facility.

Shell Eastern Trading, a subsidiary of oil and gas giant Shell, has signed a long-term deal to purchase liquid natural gas (LNG) from a subsidiary of Mexico Pacific.

Under the 20-year sales and purchase agreement, Shell will buy 2.6 million tonnes of LNG a year from the first two trains of Mexico Pacific’s anchor LNG export facility in Puerto Libertad, Mexico.

The LNG is planned to be purchased on a free on-board basis.

Mexico Pacific president and CEO Douglas Shanda said: “We are delighted to welcome Shell as a foundation customer at our anchor LNG facility.

“Their recognition of the advantages our location offers, including access to low-cost Permian gas, avoidance of the Panama Canal to ensure a shorter shipping distance to Asia, and lower landed pricing, demonstrates the value of West Coast North American LNG.

“We are equally delighted that Shell has chosen to work with us as we continue to pursue LNG production growth to meet increasing energy security needs.”

Scheduled to start commercial operations in 2026, Mexico Pacific’s LNG facility will comprise three trains and have a combined annual capacity of 14.1 million tonnes.

Shell energy marketing executive vice-president Steve Hill said: “Energy security remains paramount for the world.

“The demand for LNG is set to continue to rise with further LNG required to ensure security of supply and progress the energy transition.

“We look forward to continuing to work with Mexico Pacific as they advance to bring more LNG online.”

Last month, Shell and APA Corporation secured three offshore blocks from Uruguay’s state-owned company ANCAP under the 2022 Open Bidding Round.

Through its subsidiary BG International, Shell won the rights to deepwater block OFF-7 and shallow-water block OFF-2, while APA secured the rights to block OFF-6.

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