Offshore Technology

Daily Newsletter

07 August 2023

Daily Newsletter

ConocoPhillips signs LNG supply deal with Mexico Pacific

The LNG will be supplied from Mexico Pacific’s Saguaro Energia LNG facility.

US oil and gas company ConocoPhillips has signed a long-term liquefied natural gas (LNG) supply agreement with Mexico Pacific.

As per the agreement, ConocoPhillips will purchase around 2.2 million tonnes per annum (mtpa) from Mexico Pacific’s Saguaro Energia LNG facility on a free-on-board basis over 20 years.

The Saguaro Energia LNG facility is located in Puerto Libertad, Sonora, Mexico.

The facility's first phase will feature three trains with a combined capacity of 15mtpa when it is completely operational.

Mexico Pacific is yet to make a final investment decision (FID) for the Saguaro Energia facility.

Mexico Pacific CEO Ivan Van der Walt said: “While our sales volumes exceed our Train 1 and 2 FID requirements, we are excited to move into oversubscribed territory with one of the strongest Permian Basin and LNG market participants in the market – a validation of our project’s fundamentals and position.

“We look forward to continuing the collaborative relationship we have with ConocoPhillips as we focus on delivering a final investment decision (FID) on our first two trains with Train 3 to follow shortly thereafter.”

ConocoPhillips executive vice president and chief financial officer Bill Bullock said: “ConocoPhillips is excited to pursue this opportunity with Mexico Pacific as we continue to focus on LNG market development to meet growing global natural gas demand.

“Expanding our LNG footprint with agreements like this further enhances a balanced, diversified, and attractive portfolio as we progress our global LNG strategy.”

The agreement with ConocoPhillips comes close on the heels of Mexico Pacific’s agreement for the Saguaro Energia project with the local government.

Similar LNG supply deals for the facility have been signed with China’s Zhejiang Energy International and Exxon Mobil.

ESG 2.0 marks a shift towards stricter environmental rules

ESG is moving into a different era, which we call ESG 2.0. While ESG 1.0 was driven by voluntary corporate action, spurred by pressure from activist consumers and investors, ESG 2.0 is being driven by a new wave of government policies. The EU has taken the regulatory lead, with rules introduced or in the pipeline that will price emissions, regulate the use of the terms ‘ESG’ and ‘sustainability’ in marketing materials, and make ESG reporting mandatory. The US has taken a different approach, favoring less regulation and more financial support in the form of tax breaks for clean industry (renewables plus nuclear and hydrogen). China is planning to expand its emissions trading system to more sectors, decarbonize its heavy industry, and ramp up its use of renewables. The new policy direction is mainly motivated by the ambition to hit net zero emissions targets. But on top of this, governments are now competing for clean industry and trying to challenge China’s leadership on the production of the world’s green technologies such as solar panels and batteries, as well as the production and refinement of materials needed for energy transition such as lithium. These driving forces are leading to policy that will impact every sector, not just heavy industry, and will keep ESG near the top of the regulatory agenda over the longer term.