LNG

Iberdrola, the Spanish utility company and former major liquefied natural player that sold most of its LNG portfolio to Pavilion Energy of Singapore in 2019, said it had agreed to sell 13 mostly gas-fired power plants in Mexico for $6 billion to the Mexican government.

The Mexican President Andrés Manuel López Obrador praised the deal with Iberdrola as a “new nationalization” of the electricity market in Mexico.

The Chairman of Iberdrola, Ignacio Galán, and Mexico’s President López Obrador, announced the deal after a meeting.

Iberdrola said the sales agreement was signed with an entity called Mexico Infrastructure Partners and involved 8,400 megawatts of capacity from 12 gas-fired plants and one 103 MW wind asset called La Venta III.

Iberdrola Chairman Galán said the Spanish utility was still committed to advancing the development of renewable energy in Mexico.

Strategy

“Iberdrola confirms its commitment to Mexico by reaffirming its leadership as the leading private generator of renewable energy with the backing of the Federal Government to continue operating its assets under market conditions and drive the energy transition in the country,” Galán explained.

“In addition, Iberdrola Mexico will continue to serve its existing customers and both parties will work together to try to resolve the various disputes that have arisen in the country in recent years,” the Iberdrola Chairman added.

Leftist President López Obrador had previously compared the attitudes of Iberdrola and several other companies to those of conquerors, a reference to the Spanish Conquistadors who had invaded South America and Mexico in the 16th Century.

Iberdrola had been a major LNG market participant until the 2019 transaction with Pavilion Energy when Iberdrola’s LNG assets were sold as part of the Spanish utility’s €3.5Bln ($3.8Bln) “non-strategic asset rotation” plan.

Mexico itself is a major importer of US pipeline natural gas as well as LNG and also has plans to be an LNG exporter.

New policy

The Mexican President said that the sales agreements for the 13 power plants allowed progress to be made on the implementation of Mexico's “new energy policy” for the future.

The transaction with Iberdrola gives the Mexico’s state-owned power company, Comisión Federal de Electricidad (CFE), or the Federal Electricity Commission, majority control over the electricity market.

“This means we're rescuing the Comisión Federal de Electricidad and this is a new nationalization of our electric industry,” stated López Obrador.

López Obrador added that the acquisition would take CFE's power generation holdings to almost 56 percent of Mexico's total, up from about 40 percent.

A statement said that the deal was expected to be completed within the next five months. 

New Fortress Energy, the US LNG production and import projects developer, said that it finalized agreements with Mexico’s Federal Electricity Commission (CFE), including plans for an offshore production hub near the Gulf of Mexico import terminal at Altamira.

NFE said that its Mexican accords were fully supported by Mexican President Andrés Manuel López Obrador and by Manuel Bartlett, the Chief Executive of the CFE.

The New York-based company noted that the final versions of the agreements would be signed at a ceremony on November 3 in Mexico City.

The NFE-Mexican accords cover the expansion and extensions of NFE’s supply of natural gas to multiple CFE power generation facilities in the northwest Mexican state of Baja California Sur.

IT additionally includes the selling of NFE’s 135-megawats La Paz power plant to CFE as well as the new FLNG hub off the coast of Altamira in the state of Tamaulipas.

For the LNG production hub, NFE said that the Mexican side through the CFE would be supplying the requisite feed-gas to multiple NFE FLNG units using CFE’s existing and under-utilized pipeline capacity.

Strategic alliance

“We are pleased to complete these agreements and expand our strategic alliance with CFE, which we expect to result in the delivery of our first FLNG unit by mid-2023 and enable the construction of a new LNG hub off the coast of Altamira,” explained Wes Edens, Chairman and CEO of NFE.

“I look forward to seeing President López Obrador next week, appreciate his continued support, and value the opportunity to demonstrate our commitment to producing cleaner, cheaper and more reliable energy for Mexico and the world,” declared Edens.

NFE commenced commercial operations in July 2021 at an LNG regasification terminal in the port of Pichilingue in Baja California Sur.

The US company noted that the terminal, which features NFE’s proprietary “ISOFlex system”, is positioned to supply natural gas to CFE’s generation facilities in the otherwise resource-stranded region.

For the Altamira operations in the Gulf of Mexico, NFE and the CFE are fully collaborating on the creation of the new FLNG hub.

Pursuant to the now finalized agreements, NFE will deploy multiple FLNG units of 1.4 million cubic metres capacity each that utilize CFE’s existing firm pipeline transportation capacity on Sur de Texas-Tuxpan Pipeline to deliver feed-gas volumes to NFE.

The Sur de Texas-Tuxpan Pipeline is operated by Canadian company TC Energy.

NFE’s first FLNG unit, which is under construction at the Kiewit Offshore Services shipyard near Corpus Christi in Texas, is currently expected to achieve mechanical completion in March 2023.

“As part of the agreements, CFE would share in the production and marketing of a portion of the LNG volumes from the new Altamira offshore FLNG hub,” said NFE.