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Mexico Considering LNG Imports for Country's Growing Demand

All of the focus has been on supplying U.S. markets, but Mexico, with growing energy demands of its own, is reviewing proposals to import and produce liquefied natural gas (LNG). Mexico is said to be close to finalizing an agreement with a group of energy companies to supply the country with 630 MMcf/d for up to 18 years.

For the past several years, Mexico has been considered a likely LNG port to supply U.S. markets. There are several terminals now proposed, including plans by Shell Oil Co., Sempra Energy and ChevronTexaco.

Still, Mexico's needs are growing. Petroleos Mexicanos (Pemex), the state-owned oil and gas company, has not unveiled any of its long-range energy plans, but there is growing discontent within the country over the lack of investment in Mexico's energy sector.

To ensure adequate supplies for the country, Energy Minister Fernando Elizondo said Pemex is negotiating with a consortium of energy companies on a $5 billion proposal to increase LNG imports for Mexico. There are no agreements in place, but according to reports, U.S.-based producer Hunt Oil Co., South Korea's SK Corp., Algeria's Sonatrac and Argentina's Tecpoetrol -- members of the Camisea upstream consortium -- may be behind the proposal.

Whether it is related to the consortium's LNG proposal or not, an official with Comision Federal de Electricidad (CFE), Mexico's state power company, recently said that the commission in July or August would launch an international tender to supply 500 MMcf/d of LNG to a proposed regasification plant at the port of Manzanillo on the Pacific Coast.

The contract, which CFE expects to have in place by January 2006, would be for at least 15 years, said CFE's Alberto Ramos, who is the project finance department deputy development director.

"Right now we are finishing up authorizations with the energy and finance secretaries," said Ramos. The Mazanillo site in Colima state already has received environmental and concession licenses, he said.

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