Woodside inks LNG supply agreement with Mexico Pacific

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Image credit: Mexico Pacific

Woodside Energy and Mexico Pacific Limited have signed a sales and purchase agreement (SPA) to purchase 1.3 million tonnes of liquefied natural gas (LNG) annually, equivalent to 18 cargoes per year, for 20 years.

LNG is projected to play a crucial role in the energy transition, and long-term demand is anticipated to remain strong. This deal is consistent with Woodside’s strategic objective of increasing global scale and flexibility in its LNG portfolio.

“As we deliver on our strategy, we aim to complement Woodside’s produced LNG supply with third parties’ volumes, giving us greater scale and portfolio flexibility to serve our customers, while optimising our LNG trading activities,” Woodside CEO Meg O’Neill said.

According to O’Neill, the agreement introduces a new LNG source, broadens geographic diversification in the Pacific Basin, and enhances Woodside’s presence in Mexico.

Adertisement

“Mexico Pacific’s Saguaro Energia LNG Project is located on the Pacific coast of Mexico, providing proximity to key markets in Asia,” she added.

Under the terms of the SPA, Woodside will purchase LNG on a free-on-board basis from the Saguaro Energia LNG Project in Puerto Libertad, Sonora, Mexico, with prices tied to US gas indices.

The agreement is conditional on Mexico Pacific making a final investment decision (FID) on the proposed third train at the Saguaro Energia LNG Project. The FID is expected in the first part of 2024, with commercial operations beginning in 2029.

“We are delighted to welcome Woodside, one of the most established global LNG market participants, as a foundation customer of Train 3, further validating the value of west coast Mexican LNG,” said Sarah Bairstow, President of Mexico Pacific. “We look forward to continuing our collaborative relationship with Woodside to bring additional supply online to address critical energy security and energy transition needs.”