Woodside is further diversifying its LNG portfolio with more U.S.-sourced gas from a new supply agreement with Mexico Pacific Ltd. (MPL), tallying another major offtaker for the proposed Mexican terminal.
Woodside has inked a 20-year, 1.3 million metric ton/year (mmty) sales and purchase agreement (SPA) for offtake from the Saguaro Energia LNG terminal on a free-on-board basis. Prices are to be linked to U.S. indexes.
MPL President and Chief Commercial Officer Sarah Bairstow said Woodside’s addition as a foundational offtaker for Saguaro’s third train further validates “the value of West Coast Mexican LNG.
“We look forward to continuing our collaborative relationship with Woodside to bring additional supply online to address critical energy security and energy transition needs,” Bairstow said.
With the latest agreement, MPL has more than 11 mmty of its proposed 14 mmty capacity from the first three trains of Saguaro under contract. The firm is targeting a final investment decision (FID) by July 2024 and a start-up of commercial operations in 2029.
The deal with Woodside also continues MPL’s streak of landing long-term contracts with major oil and gas players looking to diversify their portfolios and reach in the Asian market.
Earlier in the year, ConocoPhillips joined majors ExxonMobil and Shell plc in anchoring the project planned for Puerto Libertad in Sonora state. Shell is currently the largest contracted offtaker at Saguaro, with a combined 3.7 mmty.
MPL has also signed deals with China’s Guangzhou Development Group Inc. and Chinese natural gas distributor Zhejiang Energy International Ltd.
Woodside, one of Australia’s largest LNG exporters, has been looking for more exposure to other gas indexes and additional supply for the Asian market as domestic fields feeding its Australian facilities decline. Last year, Woodside supplemented its U.S. volumes from Cheniere Energy Inc.’s Corpus Christi LNG with two SPAs for offtake from the proposed Commonwealth LNG project in Louisiana.
Woodside CEO Meg O’Neill said MPL’s strategy to use competitively priced gas from the Waha hub in West Texas to feed LNG exports to Asia was a perfect fit for its own plans.
“This agreement with Mexico Pacific delivers a new source of LNG into our trading portfolio, expands our geographic diversification in the Pacific Basin and builds on our presence in Mexico,” O’Neill said.
Waha prices averaged $2.265/MMBtu in December bidweek trading, according to NGI’s Bidweek Survey, compared with $2.710 for Henry Hub. Earlier in the year, Waha prices also dipped into negative territory as pipeline constraints continue to strand natural gas output from the basin.
While MPL is closing the gap on the contracting side, it is still working to progress its pipeline projects to feed the facility. Late last month, the company disclosed it had secured engineering, procurement and construction (EPC) contractors for the Sierra Madre project. The 500-mile, 2.8 Bcf/d capacity pipeline could supply Permian gas from the border through the states of Chihuahua and Sonora to Puerto Libertad.
On the U.S. side of the border, Oneok Inc. is awaiting an FID of Saguaro to proceed with the 2.8 Bcf/d Saguaro Connector pipeline, which would connect the Waha hub with the Sierra Madre pipeline.
