Australian energy company Woodside has inked a 20-year agreement with Mexico Pacific, the developer of the Saguaro Energia LNG export project in Puerto Libertad, Sonora, to purchase 1.3 million tonnes per annum (mtpa) of liquefied natural gas (LNG). The deal, subject to Mexico Pacific's final investment decision (FID) on the proposed third train at the Saguaro Energia LNG project, aligns with Woodside's strategic goal of expanding its LNG portfolio globally.

The LNG sale and purchase agreement stipulates that Woodside will buy LNG from the Saguaro Energia LNG project on a free-on-board basis, with pricing linked to US gas indices. The FID for the third train is anticipated in the first half of 2024, and commercial operations are targeted to commence in 2029.

Woodside's CEO Meg O’Neill highlighted the company's commitment to enhancing its LNG portfolio and flexibility, stating that the agreement with Mexico Pacific complements Woodside's produced LNG supply, providing greater scale and portfolio flexibility. She emphasized the strategic significance of this deal, which expands geographic diversification in the Pacific Basin and builds on Woodside's presence in Mexico.

The Saguaro Energia LNG project, located on the Pacific coast of Mexico, is a 15 mtpa facility with notable cost and logistical advantages. Leveraging low-cost natural gas from the nearby Permian Basin, the project offers the lowest landed price of North American LNG into Asia. The shorter shipping route to Asian markets, avoiding the Panama Canal, further enhances its competitiveness. The facility has garnered support from the Mexican state of Sonora and has secured agreements with energy majors like Zhejiang Energy, Shell, ExxonMobil, and ConocoPhillips for LNG offtake.