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López Obrador announces alliance between Mexico Pacific and CFE for gas pipeline

Mexico City, Mexico — An alliance between Mexico Pacific and the CFE has been made for the construction of a gas pipeline. On Saturday, President Andrés Manuel López Obrador witnessed the consolidation of the strategic alliance between the company Mexico Pacific Limited and the Federal Electricity Commission (CFE) for the construction of a gas pipeline.

The alliance will also include a liquefaction plant in Puerto Libertad, Sonora.

In a statement, López Obrador explained that the project contemplates an investment of $13 billion USD in addition to the creation of 13,000 direct jobs and 20,000 indirect.

He reported that the strategic alliance between both energy companies provides numerous benefits for the state including around $25 billion USD in income for the CFE.

The liquefaction plant in Puerto Libertad will be called Saguaro Energía LNG. It will have the capacity to produce and export, from the Mexican Pacific coast to the Asian market, liquefied natural gas equivalent to 2 billion cubic feet of natural gas in 445 hectares.

It will be able to supply one in five LNG ships imported by China or Japan or more than 60 percent of imports from Taiwan or India, López Obrador explained.

López Obrador announces alliance between Mexico Pacific and CFE for gas pipeline
López Obrador made the announcement July 15 after a meeting with both sides. Photo: AMLO July 15, 2023.

He says it will be fed by a gas pipeline that will be built by México Pacific Limited, with which they will transport up to 2.8 trillion thermal units per day, equivalent to 2.8 billion cubic feet of natural gas, from the Permian zone in Texas, to Puerto Libertad, Sonora.

The route of the gas pipeline considers a length of more than 800 kilometers in national territory and will pass through more than six municipalities in Chihuahua and ten municipalities in Sonora.

This location represents an advantage over similar projects on the east coast of America, since the ships will require eleven fewer days to reach Asia, which means lower costs and emissions.

The CFE has the possibility of transforming the profits from the sale of gas into ownership of the assets. If this contractual option grows, the CFE could have a 4 percent stake in five years, in ten years, 8 percent and 15 percent in 15 years.

The Federal Electricity Commission will not acquire debt nor will it absorb all the costs. It will provide 40 percent of the natural gas that the plant will need in exports.

Through its subsidiary CFE International, it will sell 800 billion thermal units per day in the United States for 20 years.

On the other hand, Mexico Pacific Limited acquired social responsibility commitments in the 16 municipalities through which the gas pipeline will pass. The social investment will be based on the needs of the communities, after consultation, as established by the Hydrocarbons Law, he explained.

To date, the company has donated land, one to the Secretary of the Navy and the other to the Sonora government, that will be used to build a medical clinic, schools and a baseball field

Puerto Libertad will expand its productive activities from fishing to industry, thereby guaranteeing regional development.