Shell Gas & Power and El Paso Global LNG announced plans to build Mexico’s first liquefied natural gas (LNG) import terminal, a 1.3 Bcf/d facility in Altamira, Tamaulipas on Mexico’s northeastern coastline. Initial investment costs are estimated to be up to $300 million, and the regasification terminal is expected to start importing LNG in the first half of 2004.

“The Shell and El Paso terminal is one of a set of projects being evaluated by the Mexican authorities for the country’s LNG supply,” said Mexico’s Energy Secretary Ernesto Martens Rebolledo, who noted the projects fit well with the country’s energy policy. “The LNG terminal in Altamira will allow us to meet the expected natural gas demand growth in a timely fashion and at market prices in a region of Mexico where growing power generation requirements are expected.”

The Shell-El Paso project will market gas directly to Pemex, the Mexican state energy company, industrial users and power producers first in the immediate area around Altamira, with the potential to expand up to 1.3 Bcf/d (10 million tons of LNG per year). Shell and El Paso will each hold a 50% interest in the project. They already have acquired rights to sufficient land at the Altamira port and are moving forward on the design of the facilities.

“The construction of the terminal in the port of Altamira will provide additional benefits to the region; such as direct and indirect employment and the utilization of local construction materials and equipment, and will bring foreign investments and revenues for Mexico’s government,” Rebolledo added.

Officials at Shell and El Paso said that by combining forces the two companies have a better chance of success with less financial burden.

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