IEnova might be interested in helping Mexico's state utility CFE to better utilize its transport capacity at the national grid by jointly developing a natural gas liquefaction terminal, the company said Oct. 22.
IEnova, the Mexican unit of California-based utility Sempra Energy, did not mention concrete discussions about a terminal, which would be its second in the country, but said it is always working with CFE to help optimize the natural gas transport capacity.
"We have a strong and constructive relationship with CFE," CEO Tania Ortiz Mena said during the company's third-quarter conference call.
The Mexican government has recently expressed its intention to export liquefied natural gas from the port of Salina Cruz, in the southern state of Oaxaca on the Pacific coast, and announced on Oct. 6 a $1.2 billion tender for the construction of a liquefaction unit to be launched before the end of the year.
The administration of President Andres Manuel Lopez Obrador has criticized the design of the natural gas pipeline infrastructure by the previous administration saying the country has excess capacity.
Mexico's total gas demand stood at 7.99 Bcf/d in September while pipeline import capacity in the country is slightly above 14 Bcf/d, according to S&P Global Platts Analytics data. Based on a 2019 public consultation by pipeline grid operator Cenagas, domestic gas demand is expected to reach 14.5 Bcf/d by 2024.
IEnova is itself in the process of constructing a terminal of its own, Energia Costa Azul, or ECA. That terminal will provide the bulk of the company′s growth in the medium term, as the Mexican economy stalls, reducing the appetite for new infrastructure projects, IEnova said.
Expecting export permit 'shortly'
Management reiterated its confidence on reaching a final investment decision for ECA before the end of the year, once it obtains an export permit from the government, expected "shortly."
"We are confident that we are going on the right track and that we are going to get it," said Carlos Ruiz Sacristan, chairman of the board during the call.
IEnova had expected to reach an FID for ECA in the first quarter of the year, but the coronavirus pandemic caused government offices to shut and halt all permit processing.
The ECA permit will be the country's first for the export of LNG from a terminal, and is intended to compete for the Asian market with US exporters from the Gulf Coast. As the route is shorter it avoids Panama Canal congestion and fees. It will also be the first in the country to be granted for 20 years, according to the company.
IEnova said during the call that Gazprom was joining Shell, both clients at ECA, in an arbitration process involving reservation fees.
However, the company will challenge these disputes as they view them as meritless, company executives said, adding that they will not interfere with the plans to convert the terminal to be able to handle LNG exports.
Testing refined products terminal
IEnova is expecting the first cargo at its recently completed refined products terminal in the port of Veracruz in the next couple of weeks to start testing.
The Veracruz terminal, which will receive, store and deliver gasoline, diesel and jet fuel, will be able to start commercial operations "shorltly after" the tests, Carlos Mauer, CFO said.
The terminal will have a total nominal capacity of roughly 2 million barrels, according to the company′s website.
IEnova is developing two more refined products terminals, one in the city of Puebla and one more near Mexico City, which are at the "pre-commissioning" stage, Mauer said.
