Mexico Pushes LNG Terminal Projects to Feed 25,000 MW of New Generation Capacity by 2010

---

Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). With Mexican power demand forecasted to grow at a rate of 6.3% a year for the next ten years and natural gas set to account for 69% of the power generating industry's feedstock by 2012, there is mounting pressure to initiate the construction of new LNG terminals. With the retirement of old power plants, equivalent to about 4,200 MW, a total of over 28,000 MW of new generating capacity will be needed by 2012. Currently Mexico's total generating capacity is something over 50,000 MW a year.

The director of financed investment projects at the state power company CFE (Mexico City), Eugenio Laris, has said that 60 to 63 new power plants representing 25,000 MW output will be needed by 2010 to meet the anticipated demand growth, which CFE puts at 5.6% by 2010. This would bring the total number of plants in the country to 250, with over 60% of these using gas feedstock, if the predicted conversions and construction of new gas powered plants are achieved. He said that at least three LNG terminals need to be in operation by 2010 to assure adequate fuel supplies.

Industrialinfo.com is currently tracking 30 power and LNG projects worth more than $10 billion in Mexico. Click on the image at right to view the Mexico Future Power & LNG Project Development by State Chart.

Laris told BN Americas that a tender is expected to be called for an LNG terminal on the country's Pacific coast, which will probably be sited at Manzanillo. This project will be similar to the existing LNG terminal project at Altamira on the Caribbean coast. Reports have indicated that Manzanillo would initially have 500 million cubic feet per day (scfd) capacity that would be progressively moved up to one billion scfd.

Altamira, a joint venture between Shell (NYSE:SHL )50% (London, U.K.), Total (NYSE:TOT )25% (Paris, France), and Mitsui (NYSE:8031 ) 25% (Tokyo, Japan), is scheduled to start operations in late 2006, with an annual capacity of 177 billion cubic feet per annum. Union Fenosa (NYSE:UNF ) (Madrid, Spain) will construct and operate the regasification plant. Gas will be supplied through CFE to three independent power projects in the region, which in terms of current project plans would have a total output of 2,710 MW.

On the west coast, Shell and Sempra (NYSE:SRE)(San Diego, California) have a joint venture project at Costa Azul, which has been permitted and should see operations begin in 2008, with a peak regasification capacity of one billion cfpd. Sempra is planning to bring in Indonesian gas, and Shell is securing supplies from the Sakhalin project in Russia.

Also due to start operating in 2008 is the Repsol-YPF (NYSE:REP) (Madrid, Spain) terminal at Port Lazaro Cardenas on the Pacific coast. This will have an initial capacity of 141 billion cubic feet per annum that will be developed up to a rate of 353 billion cubic feet per annum. Another 1.3-billion scfd terminal should come on stream in 2008 at Puerto Libertad on the Gulf of California. Sonora Pacific Liquefied Gas (DKRW subsidiary, Houston, Texas) plans to start construction with Bechtel (San Francisco) (California) and CBI (NYSE:CBI) (Amsterdam, Netherlands) in mid-2005. Eight hundred million scfd will be exported to the U.S. under an agreement with El Paso (NYSE:EP) (Houston, Texas). A 560-kilometer pipeline infrastructure will be built in Mexico to link with El Paso's interstate pipeline system at the U.S. border.

Some approvals have been granted by the Mexican government for the Coronado Islands terminal planned for startup in 2007 by ChevronTexaco (NYSE:CVX) (San Ramon, California). The plant will have an initial 700-million scfd capacity, which would be moved up to 1.4 billion scfd. There has been strong political and environmental opposition to the project, but the Mexican hydrocarbons energy authority has expressed the belief that the project will advance as planned.

The reform of the energy system in Mexico has taken a long and arduous route with tensions between CFE, political power brokers, and independent local and foreign power companies, leading to sidestepping, rather putting the best foot forward. It would now seem, on the evidence of CFE spokesmen and the developing LNG projects, that delivery will take place - in time. There is no dispute over Mexico's need for a 50% hike in generating capacity fed, in the main, by gas.

View Project Report - 65000308 65000291 65000469 65000445 65000456 65000476

Industrialinfo.com is the leading provider of global industrial market research. We specialize in helping companies develop information solutions to maximize their sales and marketing efforts.