Mexico is scrambling to lock in additional Peruvian LNG supplies after an explosion in mid-September at a gas-handling plant left nearly 30 people dead and hit domestic pipeline gas flows from the Burgos basin.
The LNG will be delivered into the Mexican market via the 3.8 million tonnes per annum Manzanillo regasification terminal (pictured) on the Pacific coast operated by state-run power company the Federal Electric Commission (CFE).
Mexico’s Energy Secretariat (Sener), state-run oil company Pemex and the Mexican Industrial Chamber Confederation (Concamin) trade group are reportedly poised to sign a three-year deal with the Andean nation.
Peru LNG already holds a 15-year term contract to supply Manzanillo and shipped a commissioning cargo to the Mexican terminal this March.
Some of the volumes under the new arrangement will be used to help plug an estimated national gas supply shortfall of 600 million cubic feet per day following the explosion.
It remains unclear what Mexican consumers will have to pay for the LNG. Local reports suggest the federal government will look for a way to lessen the price shock.
Pipeline prices are trading at some of their lowest levels in decades thanks to the shale gas revolution across the border in the US. The lion’s share of current imports is coming from the US Eagle Ford Shale play.
The stop-gap LNG deal with Peru is a much costlier option but Mexico does not have any spare pipeline capacity to meet surging local demand.
State-run enterprises will likely shoulder much of the additional cost of LNG, according to reports.
