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Customers Line Up for Next LNG Wave

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LNG project developers continue to make progress in signing new customers, helping firm up the long-term outlook for natural gas demand in East Daley Analytics’ Macro Supply and Demand Forecast.

On January 16, Mexico Pacific signed ExxonMobil LNG Asia Pacific (EMLAP) to another commitment, a contract for 1.2 MMtpa (~0.16 Bcf/d) from Train 3 of the proposed Saguaro Energia LNG facility on Mexico’s Pacific coast. The latest contract will supply EMLAP with LNG on a free-on-board basis for a 20-year term from the project.

Mexico Pacific already has 1.3 MMtpa of binding offtake agreements with EMLAP signed last February. EMLAP also holds an option to purchase another 1 MMtpa from Train 4 of the Saguaro LNG project.Picture1-Jan-26-2024-04-43-23-2484-AM

The latest sales and purchase agreement (SPA) brings Saguaro Energia to 81% contracted in total. East Daley expects the facility to take a final investment decision (FID) this quarter.

The Saguaro facility will be supplied in part by ONOEK’s (OKE) proposed Saguaro Connector out of the Permian Basin. In September, OKE management said FID of the pipeline is dependent on Mexico Pacific’s export facility reaching FID. Both projects may be waiting on progress for the Saguaro Energia Gas Pipeline. The joint development between Mexico Pacific and the Mexican Comision Federal de Electricidad (CFE) will connect to OKE’s Saguaro Connector at the border.

Another next-wave project, Glenfarne’s Texas LNG, signed a heads of agreement (HoA) with gas producer EQT for 0.5 MMtpa for a 15-year term. East Daley does not include Texas LNG (4 Mtpa export capacity) in our LNG export forecast because the facility has no binding offtake agreements. Before the latest HoA, the project had no supply agreements of any kind.

EQT also signed an HoA with Commonwealth LNG to produce 1 MMtpa under a 15-year tolling agreement in September ‘23. Commonwealth LNG expects to reach FID in the 1Q24 but would need to convert several HoAs to binding agreements to do so. Thus far, the 8.4 MMtpa project is only 30% contracted under a single SPA with Woodside. However, Commonwealth has an additional 7.5 MMtpa of HoAs dating to 2019 that could be converted to binding contracts. – Oren Pilant Tickers: OKE, XOM.

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