Noticias

Sempra subsidiary in Mexico still waiting for LNG permit

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The Energia Costa Azul LNG facility (Sempra Energy)
The Energia Costa Azul LNG facility, outside Ensenada, Mexico. which is operated by IEnova, a subsidiary of San Diego-based Sempra Energy.

A proposed liquefied natural gas expansion project at a facility in Baja California operated by the Mexican subsidiary of San Diego’s Sempra Energy remains on hold as corporate officials still await obtaining one last permit from the Mexican government.

Executives for Mexico City-based IEnova said in a conference call with energy analysts Thursday that the effects of the COVID-19 pandemic have slowed down the regulatory process.

“We’re working very close with the government to take the permit that we are still missing and we are confident that we are going to get it,” said Carlos Ruiz Sacristán, IEnova’s executive chairman and CEO of Sempra North American Infrastructure. “This is very important for us and we are really optimistic about it.”

The Energía Costa Azul facility near Ensenada already has the ability to import LNG shipments but is looking to add components to the site so that it can liquefy and export gas to markets — particularly in Asia — that are hungry to replace coal and other fuels with natural gas to heat homes and power businesses. The project can also supply gas to isolated markets within Mexico.

The gas would come into Mexico from the U.S. via a new $400 million pipeline on the Mexican side of the border.

IEnova and Sempra officials had hoped to make a final decision on whether to proceed with the project by the end of June but cannot pull the trigger until the final permit is granted.

“This permit will be the first of its kind in Mexico,” said IEnova CEO Tania Ortiz Mena, who said Mexico’s minister of energy “has put a lot of time” into evaluating the export permit. “I think we have answered all of their questions, met all of their requirements.”

President Andrés Manuel López Obrador, in office since December 2018, has been a longtime critic of energy reform measures put in place by his predecessors that encouraged private investment by foreign companies into the Mexico energy and power sectors.

The Energía Costa Azul project is considered potentially lucrative because of its location. Since most U.S. LNG export facilities are located in the Gulf Coast, shipments heading to Asia must go through the Panama Canal. But LNG coming from a site on the West Coast can skip paying Panama Canal tolls and reach their destinations in about half the time.

In May, the project finalized 20-year agreements with France’s Total and Japan’s Mitsui that would cover the full capacity of the LNG produced by the proposed expansion.

Last year, Sempra opened its $10 billion Cameron LNG facility on the Louisiana Gulf Coast and the company is considering opening another liquefaction and export facility in nearby Port Arthur, Texas.

A final investment decision on Port Arthur, however, has been pushed back to next year as the global LNG market has slowed in recent months because overall energy demand has shrunk due to the effects of the pandemic.

“Our view is that the long-term fundamental outlook for LNG demand hasn’t changed,” Sempra spokeswoman Paty Ortega Mitchell said in an email. “Sempra LNG’s long-term strategy is built upon our view, which we believe our commercial partners share, that natural gas, particularly in the form of LNG, will play a critical role in satisfying growing global energy demand over the next several decades, especially in Asia, as countries keep working toward the energy transition.”

Environmental groups have criticized LNG export projects, saying they extend the burning of fossil fuels and contribute to emissions of methane, which is about 30 times more potent than CO2 when released into the atmosphere.


(Sempra Energy) The Energia Costa Azul LNG facility, outside Ensenada, Mexico. which is operated by IEnova, a subsidiary of San Diego-based Sempra Energy. A proposed liquefied natural gas expansion project at a facility in Baja California operated by the Mexican subsidiary of San Diego’s Sempra Energy remains on hold as corporate officials still await obtaining one last permit from the Mexican government.

Executives for Mexico City-based IEnova said in a conference call with energy analysts Thursday that the effects of the COVID-19 pandemic have slowed down the regulatory process.

“We’re working very close with the government to take the permit that we are still missing and we are confident that we are going to get it,” said Carlos Ruiz Sacristán , IEnova’s executive chairman and CEO of Sempra North American Infrastructure. “This is very important for us and we are really optimistic about it.”

The Energía Costa Azul facility near Ensenada already has the ability to import LNG shipments but is looking to add components to the site so that it can liquefy and export gas to markets — particularly in Asia — that are hungry to replace coal and other fuels with natural gas to heat homes and power businesses. The project can also supply gas to isolated markets within Mexico.

The gas would come into Mexico from the U.S. via a new $400 million pipeline on the Mexican side of the border.

IEnova and Sempra officials had hoped to make a final decision on whether to proceed with the project by the end of June but cannot pull the trigger until the final permit is granted.

“This permit will be the first of its kind in Mexico,” said IEnova CEO Tania Ortiz Mena , who said Mexico’s minister of energy “has put a lot of time” into evaluating the export permit. “I think we have answered all of their questions, met all of their requirements.”

President Andrés Manuel López Obrador, in office since December 2018, has been a longtime critic of energy reform measures put in place by his predecessors that encouraged private investment by foreign companies into the Mexico energy and power sectors.

The Energía Costa Azul project is considered potentially lucrative because of its location. Since most U.S. LNG export facilities are located in the Gulf Coast, shipments heading to Asia must go through the Panama Canal. But LNG coming from a site on the West Coast can skip paying Panama Canal tolls and reach their destinations in about half the time.

In May, the project finalized 20-year agreements with France’s Total and Japan’s Mitsui that would cover the full capacity of the LNG produced by the proposed expansion.

Last year, Sempra opened its $10 billion Cameron LNG facility on the Louisiana Gulf Coast and the company is considering opening another liquefaction and export facility in nearby Port Arthur, Texas.

A final investment decision on Port Arthur, however, has been pushed back to next year as the global LNG market has slowed in recent months because overall energy demand has shrunk due to the effects of the pandemic.

“Our view is that the long-term fundamental outlook for LNG demand hasn’t changed,” Sempra spokeswoman Paty Ortega Mitchell said in an email. “Sempra LNG’s long-term strategy is built upon our view, which we believe our commercial partners share, that natural gas, particularly in the form of LNG, will play a critical role in satisfying growing global energy demand over the next several decades, especially in Asia, as countries keep working toward the energy transition.”

Environmental groups have criticized LNG export projects, saying they extend the burning of fossil fuels and contribute to emissions of methane, which is about 30 times more potent than CO2 when released into the atmosphere.