Contrary to previous reports, the opening of a 1 Bcf/d liquefied natural gas (LNG) receiving terminal developed by a Korean-Japanese consortium has been delayed until early 2012, according to business news reports Friday south of the U.S. border. A variety of “setbacks” are being dealt with, an ICIS Heren report indicated.
A major setback to the LNG facility’s commercial start apparently came from the landfall of Hurricane Jova in October, according to the reports. In addition, a force majeure was declared at the LNG facility by the terminal’s only customer, Mexico’s Federal Electricity Commission (CFE), which potentially is impacting the long-term supply contract with Spain-based Repsol.
The consortium of Mitsui & Co. Ltd. (37.5%), Samsung Engineering & Construction (37.5%) and Korea Gas Corp. (25%) secured a 20-year contract for the $900 million project three years ago with CFE to build and operate the receiving terminal along the western mainline coast at Manzanillo (see Daily GPI, March 11, 2008).
Work now has reportedly begun removing a railway line that is said to be impeding marine traffic into the Pacific Coast LNG terminal that is essentially built. This is supposed to lead to commissioning of the first LNG cargoes early next year. Dredging in the port at Manzanillo still needs to be completed, too, according to the report by ICIS, a niche global information provider in the natural gas, electricity and coal sectors.
A Repsol subsidiary is supposed to deliver LNG supplies from its Peru liquefaction plant when Manzanillo is ready to start operations. The pricing will be tied to U.S. natural gas futures at Henry Hub.
Two companies with active gas interests in Mexico were contacted by NGI for confirmation of the latest reports, but they did not have any added information. Sempra Energy has its Energia Costa Azul LNG terminal in North Baja California in Mexico, along with numerous transmission and distribution pipeline operations. TransCanada Corp. has numerous pipelines or proposed pipeline projects south of the U.S. border.
Earlier this year TransCanada completed building a $320 million pipeline in Mexico that will deliver regasified LNG from the Manzanillo terminal (see Daily GPI, June 21).
The entire capacity of the 190-mile, 30-inch-diameter pipeline is held under a 25-year contract with CFE. Two years ago TransCanada won the contract to build, own and operate the pipeline (see Daily GPI, May 8, 2009).
The proposed Guadalajara Pipeline follows a route from Manzanillo on Mexico’s Pacific Coast to Guadalajara, the second largest city in Mexico. The pipeline would be capable of transporting 500 MMcf/d on a short segment from the LNG plant to a CFE-run power plant; otherwise, the rest of the pipeline will have a 320 MMcf/d capacity to Guadalajara, according to a TransCanada spokesperson.
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