Woodside to purchase LNG from Mexico Pacific’s Saguaro Energia project

Australian energy giant Woodside has signed an agreement with Mexico Pacific, a developer of the LNG export project in Puerto Libertad, Sonora, to purchase 1.3 million tonnes per annum (mtpa) of LNG for 20 years.

Under the agreement, Woodside will purchase the LNG from the Saguaro Energia LNG project, located in Puerto Libertad, Sonora, on a free-on-board basis with pricing linked to US gas indices.

For Woodside, this agreement is consistent with the company’s strategic objective of building global scale and flexibility in its LNG portfolio.

Woodside’s CEO Meg O’Neill said: “As we deliver on our strategy, we aim to complement Woodside’s produced LNG supply with third parties’ volumes, giving us greater scale and portfolio flexibility to serve our customers, while optimising our LNG trading activities.

“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. Mexico Pacific’s Saguaro Energia LNG Project is located on the Pacific coast of Mexico, providing proximity to key markets in Asia.”

The LNG sale and purchase agreement is subject to Mexico Pacific taking a final investment decision (FID) on the proposed third train at the Saguaro Energia LNG project. The FID is expected in the first half of 2024 and commercial operations are targeted to commence in 2029.

“We are delighted to welcome Woodside, one of the most established global LNG market participants, as a foundation customer of Train 3, further validating the value of west coast Mexican LNG,” said Sarah Bairstow, President of Mexico Pacific. “We look forward to continuing our collaborative relationship with Woodside to bring additional supply online to address critical energy security and energy transition needs.”

The 15 mtpa Saguaro Energia LNG facility is said to be the most advanced LNG development project on the West Coast of North America. According to Mexico Pacific, it has significant cost and logistical advantages, including the lowest landed price of North American LNG into Asia, leveraging low-cost natural gas sourced from the nearby Permian Basin, and a significantly shorter shipping route that avoids Panama Canal transit for Asian markets.

The project also received support from the government of the Mexican state of Sonora. Energy majors such as Zhejiang Energy, Shell, ExxonMobil, and ConocoPhillips already signed sales and purchase agreements with Mexico Pacific to offtake LNG from the facility.