Latin gas demand makes Mexico, Chile LNG centers
Wed May 18, 2005 01:29 PM ET
reuters.com
LA JOLLA, Calif., May 18 (Reuters) - Growing demand for Latin American natural gas and failing production in two of its nations is helping to ensure that Mexico and Chile will become centers for liquefied natural gas ports in the region, experts said.
International energy companies are trying to build ports in northwest Mexico in part to help meet burgeoning California demand, but also growing consumption internally.
Mexico's appetite for gas, while miniature compared to the United State's, grew 6.3 percent in 2003, the last year statistics were available, according to BP Plc. Mexico's state oil company Pemex is struggling to meet the nation's gas demand, let alone export to the United States, which it has not done since 2002.
But by the beginning of the next decade, the United States could get some of its gas by way of Mexico.
An LNG "invasion" is coming to Mexico in the form of four LNG terminals that have a total of 3.8 billion cubic feet per day of capacity and a "probable" chance of becoming a reality, according to Washington D.C.-based advisors Navigant Consulting (NCI.N: Quote, Profile, Research) .
They include California-based Sempra Energy's (SRE.N: Quote, Profile, Research) Costa Azul port on the Pacific Coast and Shell's (RD.AS: Quote, Profile, Research) (SHEL.L: Quote, Profile, Research) Altamira port project on the Gulf Coast. In addition, six "possible" terminals could provide an additional 4.2 billion cubic feet per day, according to Navigant.
At least one of the possible projects, Chevron Corp.'s (CVX.N: Quote, Profile, Research) 700 million cubic feet per day Islas Coronado port, is being held up not by the Mexican government, but by supply questions.
"It's not the permits that they are waiting for. They are waiting for a decision from their gas plant in Australia," a source close to Chevron told Reuters late Tuesday at a Latin American energy conference.
"Right now they're confident (Australian project) Gorgon will go forward, and so they should be ready to make an investment decision in 2006," the source said. The port is expected to receive LNG in Mexico by 2009 or beyond.
In South and Central America, natural gas demand grew at 10.7 percent in 2003, led by Chile, Brazil and Peru, according to BP.
Chile is considering building the first LNG port in South America as supply from Argentina, which used to provide it with 100 percent of its gas, has been halted by the effects of the 2001-2002 financial crisis.
Recent political strife also means Bolivia is having major problems with gas exports.
"For Chile the big question will be when Argentina's gas or another source of gas becomes available again in the lower range of $2.50 to $3.50 per million British thermal units," said Chris Gonclaves, an energy director at Navigant.
He said an LNG port could be draining over time to Chile because the average long-term estimate for LNG gas prices is nearly $4 per mmBtu.
But Chile's Energy and Economy Minister Jorge Rodriguez said on Tuesday the port would be compatible even if Argentina's or another source of gas came back at a later date because his nation's gas demand is growing at 6 percent a year.
As it waits for gas, Chile is burning diesel at its electricity plants, which it would rather not do for pollution and acquisition problems.
(Additional reporting by Catherine Bremer) |
