Marathon drops Mexico LNG plant on govt opposition
biz.yahoo.com
Monday March 1, 5:50 pm ET
MEXICO CITY, March 1 (Reuters) - Marathon Oil Corp. (NYSE:MRO - News) said on Monday it was ditching plans to build a liquefied natural gas plant on Mexico's Pacific coast after the state government expropriated the site it was eyeing.
The project was one of a handful of LNG plants that foreign oil companies are bidding to build in Mexico so that they can ship in supercooled liquid gas from overseas, regasify it, and sell it to northwestern Mexico and the booming U.S. market.
"Marathon and its partners are surprised and disgusted by the local government's decision to expropriate the land which we had an option to purchase," said Marathon spokesman Paul Weeditz.
"It is obviously a sign that the government will not support the project and as such it is clear that the Tijuana energy center will not be built," he told Reuters.
He said the company did not have a "plan B" or alternative site in the area for its LNG project. He also declined to say how much Marathon has spent in wasted investments into the project, which it has been planning for the past two years.
The Baja California state government said over the weekend it was expropriating the land in question to use for public development projects.
An official at Mexico's CRE energy regulator said recently he doubted Marathon would succeed with its project because of stiff local opposition to it using the site, which is close to residential areas around Tijuana.
Marathon had hoped to win over the state government and local residents by proposing to combine its LNG plant with a wildlife sanctuary and a waste-water treatment facility that would have provided coolant for the plant and avoided tapping into scarce local fresh water reserves.
Marathon was the first oil major to apply last year for a permit to construct an LNG plant in Baja California.
Royal Dutch/Shell (Amsterdam:RD.AS - News; London:SHEL.L - News) and Sempra Energy (NYSE:SRE - News) are awaiting the final green light to build a plant together in a 50-50 joint venture at a more isolated spot on the Baja California coast.
ChevronTexaco (NYSE:CVX - News) is bidding to build a $650 million offshore LNG plant just off the Coronado Islands, a cluster of tiny Pacific islands south of the U.S.-Mexico border.
It hopes to have the necessary permits by mid-year, although environmentalists and opposition politicians are mounting a campaign against the project. |
