MEXICO CITY  – U.S.-based Sempra Energy will be granted an export permit for a liquefied natural gas facility in northwest Mexico if the company helps address excess supply in the area, Mexican President Andres Manuel Lopez Obrador said on Friday.

Mexico president offers Sempra LNG export permit on condition- oil and gas 360

Source: Reuters

San Diego-based Sempra had previously signaled its Mexican unit, IEnova, was close to obtaining the permit for the LNG plant at its existing regasification terminal near Ensenada, in Baja California.

Lopez Obrador told reporters at a news conference he was inclined to approve the permit. But he also complained of excess natural gas in the northern Pacific coastal region, given that state-owned power company Comision Federal de Electricidad (CFE) does not use the fuel there to generate electricity.

CFE plants in the area burn highly-contaminating fuel oil instead.

Lopez Obrador said supply contracts inked by the previous government obliged CFE to buy natural gas that was not needed.

“If we stop buying all that gas that is not used and that we have to pay for, and if (Sempra) helps us export that gas via that plant in Ensenada, then we’d give the permit,” said Lopez Obrador.

Sempra and IEnova did not immediately respond to requests for comment.

The president’s comments appeared to walk back the government’s interest in requiring IEnova to build a second LNG export facility before approving the Ensenada plant, which was reported by Reuters in August.

Lopez Obrador said a second plant would be costly and time-consuming.

The LNG export permit would be the first of its kind in Mexico and feature an initial LNG export capacity of some 3 million tonnes per annum.

It would also likely represent a lucrative means of selling LNG to Asian markets, where natural gas prices are considerably higher then in the Americas.

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