North American natural gas futures were once again above the $2.00/MMBtu mark as the market turned to the post-summer season.
On Thursday, the New York Mercantile Exchange contract for October was trading at around $2.100. The September contract rolled off the board on Tuesday at $1.930.
According to NGI calculations, Mexico imported 7.643 Bcf of natural gas via pipeline from the United States on Thursday as cross-border flows remained high.
Meanwhile, there has been news aplenty from potential liquefied natural gas export projects in Mexico. These projects would source U.S. gas, principally from the Permian Basin, where prices have often slipped into negative territory this year.
On Wednesday, Mexico Pacific Ltd. LLC said it had signed a sales and purchase agreement (SPA) with Korea’s largest energy trading company, Posco International Corp. The volumes would come for a proposed LNG project on Mexico’s Pacific coast.
The SPA indicated Posco would purchase 0.7 million metric tons/year (mmty) of LNG on a free-on-board basis over 20 years. The companies are “evaluating additional opportunities to expand upon this initial commercial partnership,” Mexico Pacific executives said.
They added they are “positioning the project for a positive final investment decision (FID).”
Mexico Pacific’s proposed Saguaro Energía LNG export terminal in Puerto Libertad, Sonora, has secured several high-profile offtakers. The company said it had finished selling volumes for three trains that combined would have 15 mmty capacity.
In separate news, Singapore-based LNG Alliance Pte Ltd., sponsor of the proposed Amigo LNG export project in Mexico, signed a long-term offtake agreement with Malaysia’s E&H Energy SDN BHD.
Amigo is a 7.8 mmty liquefaction terminal envisioned for the Port of Guaymas, also in Sonora on Mexico’s Pacific coast. Under the deal, Amigo would supply 3.6 mmty of LNG over 20 years to E&H Energy for the Malaysian market beginning in the second half of 2027.
LNG Alliance has not yet reached an FID on Amigo, which would re-export pipeline gas imported to Mexico from the United States. It has, however, secured approval from the U.S. Department of Energy (DOE) to export LNG worldwide, i.e. to free trade agreement (FTA) and non-free trade agreement (non-FTA) countries. A federal court in July ordered the Biden administration to end its pause on considering new requests for non-FTA LNG exports.
One of the numerous hurdles facing companies seeking to develop LNG export facilities in Mexico sourcing U.S. gas is gaining export approvals. Earlier this year, the Biden administration paused issuing non-FTA permits pending a review.
In a related development, Mexican developers backed by Big River Energy LLC are seeking approval from DOE for a 4 mmty LNG export project in Manzanillo. That is down the coast from Amigo and also would be fed by U.S. natural gas.
Gato Negro Permitium Uno SAPI de CV filed a request with DOE to import up to 0.647 Bcf/d of natural gas from the Waha hub in West Texas that would be delivered for up to 20 years.
It also requested approval to re-export up to 0.556 Bcf/d of LNG to FTA countries for 20 years, starting in 2027. The company has also reportedly asked the DOE for non-FTA export approval, despite the permitting freeze.
Poten & Partners LNG analyst Sergio Chapa told NGI’s Mexico GPI that the LNG market “in the Americas continues to be dynamic. Regulatory chaos in the U.S. has caused some global buyers to take a second look at export projects in the region and elsewhere around the globe.
“The recent announcements that we see coming out of Mexico signal that global buyers still have an appetite for Henry Hub or Waha natural gas, even if it’s not coming directly from the U.S.,” Chapa said.
Mexico Prices
In Mexico on Wednesday, natural gas cash prices at Los Ramones fell by 0.4 cents day/day to $2.200, according to NGI data. Monterrey via the Mier-Monterrey system was down 0.5 cents to $1.983. Tuxpan in Veracruz via Cenagas saw the spot price fall 0.2 cents to $2.723.
Out West, the Guadalajara natural gas price fell by $1.092 to 34 cents on Wednesday. Farther north in El Encino, prices via Tarahumara were minus $2.957, $2.184 lower than the previous day.
On the Yucatán Peninsula, the cash price at Mérida was $3.726 on Wednesday, down 0.4 cents.
U.S. Storage
On Thursday, the U.S. Energy Information Administration (EIA) reported a 35 Bcf build for the week ended Aug. 23.
The South Central region, close to Mexico pipelines, saw a 6 Bcf withdrawal week/week. The region saw a 8 Bcf decrease in salt stocks and a gain of 2 Bcf in nonsalts.
For the week ended Aug. 16, total working gas in the U.S. South Central region stood at 1,119 Bcf, up from 1,056 Bcf for the same time one year ago. The figure was 109 Bcf higher than the five-year average of 1,010 Bcf.
