Mexico is on track to become Latin America’s leading LNG exporter in terms of regasification capacity, while the region as a whole could become a net liquefied natural gas exporter, according to Poten and Partners.
The shipbroker and consulting firm’s Sergio Chapa, senior LNG analyst, provided an overview of the regional LNG balance during a webinar on Wednesday.
Mexico has three liquefaction projects with a combined capacity of 7.5 million metric tons/year (mmty) currently under construction, while another eight projects totaling 50.2 mmty are proposed. Developers mostly plan to re-export gas imported via pipeline from the United States.
Mexico is “one of the stars of the LNG industry in Latin America,” Chapa said. Formerly a major LNG importer, Mexico now receives essentially all of its gas through pipelines from its neighbor to the north, following a massive buildout of cross-border infrastructure over the last decade.
As for the region at large, “Latin America could become a net LNG exporter [by 2030] if the majority of proposed projects reach” final investment decision or FID, Chapa said.
The region’s regasification capacity currently stands at 72 million mmty, versus liquefaction capacity of 19.5 mmty, though both those numbers are poised to increase in the near future.
The liquefaction figure has more upside potential, Chapa noted, although the potential scenarios vary widely.
Poten and Partners has tallied 102 mmty of liquefaction capacity proposed currently in the region, versus 86 mmty of regasification capacity. The “high” scenario modeled by the firm envisions all of these projects coming to fruition, Chapa explained.
Poten and Partners also modeled a medium scenario in which only a portion of the liquefaction capacity proposed in Mexico and Argentina comes online. In this second scenario, the region’s liquefaction capacity would reach 50 mmty, while the low scenario would see it hit 27 mmty.
Just two countries in the region, Peru and Trinidad & Tobago, currently export LNG. Trinidad is the leader by far with current export capacity of around 15 mmty, while Peru boasts 4.5 mmty.
Mexico is poised to become the third this summer upon completion of a 1.4 mmty offshore liquefaction unit by New Fortress Energy Inc.
In Argentina, state oil company YPF SA is aiming to sanction a 25 mmty liquefaction terminal by the end of the year.
Numerous factors could influence the pace and extent of liquefaction capacity growth in Latin America, Chapa said.
For example, Argentina, home to the ascendant Vaca Muerta Shale formation, could choose to prioritize pipeline exports to neighbors such as Brazil and Chile over LNG exports, Chapa said.
Trinidad, meanwhile, will need a new source of feed gas to replace its own declining reserves.
The proposed Mexico projects, for their part, are reliant on approvals from the U.S. Department of Energy to re-export gas to non-free trade agreement partners, Chapa highlighted.
As for Latin America’s import picture, Brazil is likely to remain the region’s largest LNG destination through 2030, though its demand can swing wildly year to year, depending on hydroelectric reservoir levels.
LNG demand from Argentina and Chile also is likely to drop as Vaca Muerta gas production increases, Chapa said.
South America also has three floating regasification and storage unit import terminals under construction totaling 10 mmty. Two are in Brazil and one is in Chile.
