jueves, agosto 18, 2022

CEO of LNG Alliance: “We expect to take FID on Amigo LNG in Mexico by December 2022”

Over the past two years, Mexico has become a new sweet spot, gaining momentum for new LNG exporting facilities as developers can bring cheap piped gas from the US into Mexico and sell it as liquefied natural gas (LNG) to the international markets.  

In an exclusive interview with GNL GLOBAL, Muthu Chezhian, Chief Executive Officer of Singapore’s LNG Alliance talks about Amigo LNG, the company’s liquefaction and export project in Sonora, Mexico.

  • Amigo LNG Project is a proposed LNG facility that will be located near Port of Guaymas, on a bay of the Gulf of California, Sonora, in the northern part of Mexico.
  • This company was authorized by the US Department of Energy in 2020 to export U.S.-produced natural gas to Mexico and re-export LNG to countries that have free-trade agreements (FTA), and do not have free-trade agreements (non-FTA) with the U.S.
  • In its initial phase, the project plans to develop a 3.5 million tonnes per annum (MTPA) onshore liquefaction facility, two tanks of 200.000 cubic meters of storage capacity, and other projects opportunities along the LNG value chain, including carbon capture facilities and a second phase expansion for additional 3.5 MTPA.
  • The company is also looking for opportunities to create a Gas Hub in Mexico.
  • LNG Alliance is planning to make a final investment decision on its proposed $2.1 billion export project phase 1 by the end of this year. 

Amigo LNG: Investment, capacity, and Location

Talking about the characteristics of the AMIGO LNG Project, Chezhian commented “Phase 1 of the Amigo LNG project, consists of a 3.5 MTPA onshore facility with one liquefaction train based on Single Mixed Refrigerant (SMR) Technology, a pre-treatment plant, and two tanks of 200.000 cubic metre storage capacity each. There is also the possibility of a phase 2, which could take the facility expansion up to 7 MTPA in the future, as the area is very suitable for it.”

“We are also planning to create a carbon-neutral facility, with the aim of producing blue hydrogen as well. It’s very important to us to make this terminal carbon neutral, so we will utilize carbon capture and as much renewable power as possible to run the facility”.

Amigo LNG Project Site. Imagen cortesy LNG Alliance

Regarding the location, he added: “The project will be located at the industrial zone of Guaymas, 5 kilometers from the port of Guaymas, Sonora, on a bay of the Gulf of California, in the northern part of Mexico. All port facilities services will be provided by the Port of Guaymas, which is adjacent to the project site. The project site has close proximity to an existing 36’’ gas pipeline with surplus capacity. The project is developed in close cooperation with the State of Sonora as a key stakeholder and a framework for the lease of the land from the State of Sonora was executed on April 21st of this year for a land area of 54 hectares, and with a maritime concession in the Sea of Cortez, thru the Secretaría de Marina. The project site is located in a relatively flat area, with deep water marine access, so we expect to have very straightforward construction.”   

Project Status

Talking about the status of the projects, Chezhian explained that Epcilon LNG LLC received a green light in December 2020 from the U.S. regulators to export domestically produced natural gas to Mexico in a volume up to 395 billion cubic feet (Bcf) per year (Bcf/yr) (1.083 Bcf per day), and re-export a portion of this natural gas as LNG at the Amigo LNG liquefaction plant.

“Our company has been very active in Mexico; Epcilon LNG’s unit Amigo LNG is developing liquefaction and export facilities in Sonora. This is currently one of our major investment projects in Latin America. For us, it has been an interesting journey in Mexico, with a very business-friendly environment provided by the State of Sonora, with active participation from both the local stakeholders in Sonora and proactive engagement from the federal Mexican regulatory authorities. The regulatory process in Mexico has been well defined, structured, relatively smooth and straightforward, and the main lesson we learnt was to get them engaged as early as possible.”

Our main challenges have been associated with how we serve the emerging domestic needs with low pipeline connectivity within Mexico, and how we can develop a virtual pipeline ecosystem using ISO LNG containers, that can serve the gas deficit industrial regions of Mexico. Our top priority is to fulfill the domestic demands in Mexico first and ensure that the energy security of Mexico is addressed thru the provision of additional LNG storage capacity which can serve as an energy reserve for the entire region during extreme winter storms, such as the one that we witnessed in 2021. We are developing this project to make Guaymas the ‘gas hub’ of the West Coast, which will provide the optimal balance for the regional needs and serve as a catalyst for an accelerated gas-based industrialization that will greatly benefit the Mexican economy, local communities, and enable a greener environment.” 

Domestic Market

Giving more details on the Mexican domestic market, Chezhian also commented on the company’s plans to contribute to the local market: “While Mexico has certain areas with the infrastructure that provides them access to gas, there are others where access is limited. Our project has proposed to allocate, out of the 3.5 MTPA export terminal, at least 0.5 MTPA to be sent through virtual pipelines to supply the local markets including the mining industry and transportation sector” …. “This was very well received by the local authorities, as this will contribute to enhancing domestic gas supply.” 

“Our project also plans to collaborate to supply gas to the industrial park in Guaymas. There is great potential in the southern part of Mexico as well, so the company hopes to ship some of the LNG there to accelerate the industrial belt development in the southwest of Mexico.”

Business model and regional market

This year, we have seen a significant increase in signing long-term supply agreements, mainly from the US LNG projects, however, as Chezhian explained, AMIGO LNG has already advanced with an offtake-centric project development approach.

“The project was initiated and has been supported since inception by two major energy companies from South East Asia and South Asia. They are highly creditworthy companies, and both have committed to offtake the most of our capacity” … “These two companies have signed up for the project from the beginning and they have been consistently backing and actively engaged with the project. To top this up, we also have customers lined up for future trains from the Far East. That is the reason why we have not actively marketed the future volumes.”

And talking about the potential buyers in Latin America he said, “Amigo LNG would also aim to target buyers in Latin America. Outside of the domestic market in Mexico, we believe there is a lot of potential in other countries in the region like Brazil and Colombia.” 

Hub Initiatives 

Looking for other business opportunities, the LNG Alliance’s CEO also spoke about creating a gas hub in Mexico. He said “A gas hub is also part of our plans in Mexico, as there is a big opportunity within the region, especially for Central America.  Mexico has all the ingredients to establish an LNG hub, in terms of geographic location, maritime access in both basins (Atlantic and Pacific), and its proximity to the largest LNG facilities in the Gulf of Mexico. We believe it will be a very successful initiative to establish a hub in Sonora, Mexico. This initiative can lead to an LNG or Gas trading hub for both importers and exporters within the region, having the support of the local and central governments, private sectors, etc.”   

“Singapore is already an Asian and international hub for energy trade. As a Singaporean company, we would like to bring the same flavor to Mexico in the State of Sonora. Within two or three years we are confident we can potentially develop a trading hub model in Mexico.”

Other developments 

Talking about other developments, the CEO pointed out: “Apart from the Amigo LNG export terminal in Guaymas, Sonora, Mexico, LNG Alliance is also involved in the other projects, currently at different stages of development. Over the last two years, we have ventured into green ammonia / green hydrogen projects in South East Asia, and we also have three importing terminal projects in development in India; Montenegro; and Indonesia. These are active live projects in which we have captive off-takers. At the same time, we are also trying to position ourselves for the future with green ammonia, as well as green and blue hydrogen, in projects in South East Asia and South Asia where we have signed Development Cooperation Agreements, and the most recent one being in Central Sulawesi for the Palu SEZ Green Ammonia project.”  READ: AEC of Singapore and PT Agri Maritim Sulteng of Indonesia sign cooperation agreement for Green Energy Hub development plan

AMIGO LNG Final Investment Decision

Closing the interview, we asked when LNG Alliance is planning to make a final investment decision (FID) on its proposed $2.1 billion Amigo LNG export project phase 1, and Chezhian said: “We aim to get the project running, making sure to keep the plan very realistic and deliverable within some practical limits. Therefore, based on our objectives, we expect to announce our FID by December 2022.”

©GNL GLOBAL

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