The proposed Sempra Energy-Shell joint venture North Baja, Mexico, liquefied natural gas (LNG) project has the best chance among current ones proposed in Mexico to actually come to fruition, but even it still faces some major questions, according to a U. S.-based expert monitoring energy developments in Mexico.

“I think all of the proposed LNG terminals, including Sempra’s, still have big question marks around them,” said George Baker, PhD, president of Mexican Energy Intelligence and Baker & Associates, Houston, who spoke Thursday at the Law Seminars International “Energy in the Southwest” conference in Santa Fe, NM. “Indeed, the ChevronTexaco proposed (offshore North Baja) project has yet to have any permits other than one by the communications ministry, so that is even more of a question mark than Sempra’s project.

“The tremendous politicized state of Baja California is going to be such that what we’ve heard about the Sempra project (in Mexico) is not yet finished. Although if any of them are going to go through, that has the best chance of being the one.”

The original vision in Mexico was for up to six of the eight LNG terminals, Baker said, noting that two are “still in play” in Baja California.

The Mexican electricity agency, CFE, wants to put a contract out in Baja as it did on the East Coast at Altamira, saying it will buy a specific portion of LNG supplies for power generation locally. “That worked out reasonably well for Shell as the only bidder on the East Coast.”

As part of his daily monitoring of the Mexican press coverage of government actions and issues, Baker said a lower profile LNG terminal proposed for the state of Sonora would have a potentially “huge” impact on Arizona and the Southwest because of its mainland location in The Sea of Cortez. In addition, his monitoring shows that in the Mexican Senate last month there were discussion concerning so-called “illegal” permits to site LNG.

“So the whole matter of the policy framework in Mexico for LNG terminals particularly for the north of Mexico is in doubt,” said Baker, who noted there have been a “whole series of setbacks in the energy field” for Mexico’s President Vicente Fox. “Right now the term — ‘L-N-G’ — does not exist in law or regulation in Mexico. The Fox Administration tried to get it passed, but weren’t able to do so.”

Similarly, attempts to push cogeneration, or off-grid self-generation have been shot down also by the Mexican Supreme Court. And the court has called into question a law allowing independent power producers in Mexico.

©Copyright 2004 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.