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. 

Spain increased its imports of Russian liquefied natural gas in 2022 despite Western sanctions over the invasion of Ukraine and with only the UK out of leading European importers voluntarily ending LNG cargo deliveries from Russia and later joined by the Baltic nation of Lithuania.

Spain, France, the Netherlands have continued to receive LNG cargoes, which are not on the formal Western sanctions list.

The shipments to Spain and other European Union nations mostly come from the Yamal LNG export plant in northeast Siberia and operated by Russian natural gas company Novatek.

Latest Spanish data showed that 12.6 percent of Spanish natural gas was imported from Russia in the form of LNG and regasified to enter the state gas grid or re-exported to other EU nations.

With the start of the war in Ukraine in February 2022, energy supplies from Russia collapsed with oil accounting for just 1 percent of Spanish imports and with only LNG surviving as a seemingly essential Russian commodity.

Regarding LNG imports, the data showed that Spain received 56,021 gigawatt hours (GWh), or 4.24 million tonnes, of LNG from Russia in 2022, which was 54.8 percent more than in 2021 when it imported 37,027 GWh, or 2.80MT of LNG.

Rise in deliveries

As a consequence, Spain’s share of LNG shipments from the Russians increased by 3.7 percentage points in 2022 from 8.9 percent to 12.6 percent.

The data showed that Russia remained the fourth largest natural gas supplier to Spain after LNG deliveries from the US, pipeline natural gas from Algeria and LNG cargoes from Nigeria.

In the last month of 2022, Russian deliveries from the Yamal plant to northwest Spain and other Spanish ternminals surpassed LNG deliveries from Nigeria and consolidated itself in third place.

This meant that in the month of December, 5,453 GWh, or 414,400 tonnes, of LNG were received by Spain from Russia .

This increased the December cargo volumes of Russia’s LNG received by Spanish terminals to 14.3 percent of the total.

The LNG deliveries contrasted with the shipment of oil cargoes to Spanish refineries.

Russia exported 698,000 tons of crude oil to Spain in 2022, which was 72.8 percent less than in 2021 when 2.6 million tons were received.

In this case, Russia’s share of crude deliveries to Spain fell from 4.6 percent of the total to 1.1 percent.

After this collapse, Russia’s became Spain’s 17th largest oil supplier, down nine places from 2021.

Enagás, the Spanish natural gas grid and LNG terminals operator. posted a 15 percent increase in net profits and said the network of six LNG terminals had saved the country money and confirmed the opening in early 2023 of a seventh and existing LNG export terminal dedicated to European Union supplies.

Enagás of Spain, the national gas grid operator with Europe’s largest LNG import terminal network and the biggest European recipient of US LNG cargoes, has launched a green hydrogen project on the Mediterranean island of Majorca backed by European Union funding.

Enagás, the Spanish natural gas network operator and LNG terminal owner, said its terminals unloaded 126 LNG cargoes in the first half of 2020, 12.5 percent more than in the same period of last year as gas demand in Spain begins to return to pre-Covid-19 levels.

Italian energy company Eni and Sonatrach, the Algerian state-run company and LNG producer, have completed the construction of the natural gas pipeline connecting the Bir Rebaa Nord and Menzel Ledjmet Est fields in the Berkine Basin in southeast Algeria.

Naturgy Energy Group, the Spanish utility and importer of US and Russian LNG, posted an annual net profit after the previous year’s losses amid continuing challenges in its businesses in Europe and South America.