US-based Sempra Energy reported that its ECA Liquefaction unit will build a plant to export liquefied natural gas (LNG) in northwestern Mexico, the only export plan for that product in the world to achieve a final investment decision (FID) by 2020.
On Nov. 13, Mexican President Andrés Manuel López Obrador said the government would grant the project an export permit provided the company helped offset the excess gas supply in the area by exporting it.
Sempra had been waiting for the 20-year export license throughout 2020. It was partly retained by the coronavirus.
ECA Liquefaction, a joint venture between Sempra LNG and Mexico's U.S. subsidiary, IEnova, will build the plant at the Costa Azul LNG import facility at a cost of about $2 billion. It expects to produce the first liquefied natural gas by the end of 2024.
The export plant, which will have a nominal capacity to produce about 3.25 million tons per year (MTPA) of LNG, already has 20-year agreements with units of Mitsui & Co Ltd and Total SE for the purchase of around 2.5 MTPA in the first phase of the project.
The location of that plant on the Pacific coast gives it an advantage over competition from Gulf of Mexico export centers because it is closer to growing Asian markets. U.S. plants usually ship LNG to Asia through the Panama Canal.
Investment demand for LNG was high for several years due to the high consumption of mainly Asian countries to meet the growing need for energy and diversify fuel sources beyond the dirtiest coal and oil.
This year, however, oil and gas companies around the world delayed decisions on new LNG terminals after coronavirus caused global demand and prices to collapse.