Mexico's First LNG Plant Nearly Complete

Reuters, September 22, 2023

The last major piece of infrastructure needed to start production at Mexico's first floating liquefied natural gas (LNG) plant is set to depart from a Texas shipyard next week, the U.S. Coast Guard said in a notice to shippers.

LNG developer New Fortress Energy (NFE.O) is planning to begin production at the 1.4-million-tons-per-year floating plant off the coast of Altamira, Mexico, in the coming weeks. The company had in August said the first cargo from the project should depart in October.

The first of three rigs that will compose the floating LNG facility arrived in Mexican waters in late August. The second departed last week from Kiewit Offshore Services' Ingleside, Texas, shipyard, according to the Coast Guard.

New Fortress did not immediately reply to a request for comment.

Altamira's first LNG plant is part of a wider project by New Fortress and Mexico's state-owned power utility CFE to build a $1.3 billion hub to convert U.S. and Mexican gas into LNG for export. Two additional floating LNG plants are under construction, with operations startup planned for 2025.

New Fortress in June was granted a permit by Mexico to export up to 7.8 million metric tons through April 2028, and it had previously received authorization from the U.S. Department of Energy to export to Mexico and other countries with trade pacts. An authorization to export to nations without free trade agreements with the U.S. is pending.

A total of nine onshore and floating LNG production facilities are planned for Mexico's Gulf and Pacific coasts, mostly to process U.S. gas.

New Fortress in 2021 bought oil rigs from Maersk Drilling to convert them into floating LNG plants. While a typical floating LNG facility can cost more than $4 billion and take up to five years to build, using jackup rigs is faster and cheaper, costing some $500 million.

If successful, the method could help many small gas producers get into the buoyant LNG market, which is seeing high demand in the aftermath of Russia's invasion of Ukraine.

New Fortress Chief Financial Officer Christopher Guinta last month said a total $3.2 billion of the company's planned infrastructure would be operational in the next 90 days, including projects in Mexico and Brazil.

(Reporting by Arathy Somesakhar and Marianna Parraga; Editing by Timothy Gardner)

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