The clock is ticking on Mexico LNG projects as a glut of liquefied natural gas supply is set to hit the market and giant projects advance elsewhere.
Some 40 million metric tons (mmt) of LNG capacity is expected to come online annually between 2026 and 2028, moving the world’s liquefaction capabilities beyond 500 mmt/year (mmty), or some 25% higher than current levels.
Mexico could add as much as 6 Bcf/d in proposed projects. But the Biden administration’s pause on new export permits could scale these back, according to experts.
All of the Mexico projects are expected to use U.S. feed gas in their projects, which means they require up-to-date U.S. permits to proceed. Meanwhile, projects in other parts of the globe are moving ahead with final investment decisions (FID) by developers.
“We've definitely seen contracting and FIDs elsewhere in the globe,” Poten & Partners LNG analyst Sergio Chapa told NGI’s Mexico GPI. “The only FIDs this year have been outside of the U.S.” He cited the United Arab Emirate’s 9.6 mmty Ruwais LNG project, which reached FID in June and is slated for start-up in 2028.
Pembina Gas Infrastructure Inc. and the Haisla Nation also recently sanctioned an LNG project. Cedar LNG Partners LP’s 3.3 million metric ton/year export facility is set for British Columbia, Canada. Exports from the floating LNG facility would begin at the end of 2028.
“With the permit pause in the U.S., that also kind of affects…some Mexican projects,” Chapa said. “What you see is an advantage for LNG export projects in Canada, Mozambique, Tanzania, Argentina, the Middle East, Asia-Pacific and elsewhere in the globe.”
In Mexico, the start of its LNG export industry keeps getting delayed.
New Fortress Energy Inc. (NFE) now says that its Fast LNG (FLNG) terminal offshore Altamira, Mexico will ship its first cargo in August. The Energos Princess LNG tanker had docked at the facility last week and was widely thought to be loading Mexico’s first ever LNG cargo.
After anchoring near the FLNG unit, it again set sail and is likely empty, according to Kpler ship tracking data. The tanker was passing south of Cuba on Wednesday and was reported as being in ballast and open for orders.
NFE management was undeterred. This week, it said it was going ahead with a second FLNG unit at Altamira, having closed a $700 million loan. The project would be developed in partnership with Comisión Federal de Electricidad (CFE) using in-place terminal infrastructure onshore in Altamira.
Management expects construction to be complete in the first half of 2026.
Meanwhile, other U.S. projects are also moving ahead. Over the weekend, Tellurian Inc. said it had agreed to sell the company along with the 27.6 mmty Driftwood LNG project to Australia’s Woodside Energy Group Ltd.
In its disclosure of the deal, Woodside targeted FID on the first phase of Driftwood by March of next year.
“Driftwood is now much more of a viable threat to other proposed LNG export projects in the U.S. and Mexico,” said NGI’s Pat Rau, senior vice president for Research & Analysis. “Specifically, Woodside addresses two main issues that had been hounding the Driftwood project for years. One is better access to capital, since Woodside is an investment grade rated entity. The other is established business relationships with customers in Asia that Woodside provides from its existing LNG operations in Australia.
“I'd argue that having management with prior experience in Australia has helped Saguaro LNG get off to a nice head start among the various proposed LNG projects in Mexico, and similar logic applies to Woodside.”
Late last year, Woodside moved to diversify its LNG portfolio in a supply agreement with Mexico Pacific Ltd. (MPL) when it inked a 20-year, 1.3 mmty sales and purchase agreement for offtake from the Saguaro Energia LNG terminal on a free-on-board basis. The terminal is slated for Puerto Libertad, Sonora, on Mexico’s west coast.
“Yes, LNG from Driftwood to Asia would have a longer distance to travel than cargoes from LNG projects along the west coast of Mexico, but Woodside is much farther down the experience curve. That is valuable. Not to mention that LNG from Driftwood would avoid an extra layer of sovereign risk since its feed gas wouldn't have to traverse the Mexican pipeline grid,” Rau said.
In related news, this week Golden Pass LNG Terminal LLC and its primary contractors agreed to a settlement that could jumpstart construction again at the Texas LNG facility. Each of the three trains at Golden Pass in Southeast Texas could add around 700 MMcf/d in feed gas demand, according to NGI calculations.
