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Asian Consortium Awarded Mexican LNG Project Contract

A Korean-Japanese consortium of three companies has secured a contract with the Mexican government's electricity commission to build and operate a 1 Bcf/d liquefied natural gas (LNG) receiving terminal along the western mainline coast at Manzanillo, the group said. Mitsui & Co. Ltd. (37.5%), Samsung Engineering & Construction (37.5%) and Korea Gas Corp. (25%) secured the 20-year contract for the $900 million project.

Mitsui said the consortium will form a jointly owned company to build and operate the terminal, from which gas is slated to power a number of existing and proposed electric generation plants in the greater Guadalajara area. Mexico's Comision Federal de Electricidad (CFE) will purchase the regasified LNG.

Under a 20-year deal with CFE, the consortium's company will manage the LNG receipt and regasification with commercial operations beginning in 2011.

In February CFE extended the time for obtaining bids from companies wanting to build the Manzanillo LNG terminal (see Daily GPI, Feb. 12). At the time Spain's Union Fenosa SA, that nation's third-largest electric utility, and Japan's Mitsui and Mitsubishi Corp. were identified as the three principal companies seeking the contract.

At that time, reports out of Mexico from energy observers indicated that the federal government was looking for another Pacific Basin source of up to 500 MMcf/d for Manzanillo. It reportedly wants another deal similar to a previous one, contracted through Spain's Repsol, to bring 500 MMcf/d from Peru.

Both Mitsui and Korea Gas reportedly are looking to expand their natural resource and energy-related global businesses in Mexico and South America.

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