Marathon's Tijuana LNG Plan Under Fire

Government officials from northern Mexico's Baja California Norte state are asking US oil company Marathon to redesign its US$1.5bn liquefied natural gas (LNG) project in Tijuana because plans conflict with a local urbanization effort, BNamericas has learned. "We have to determine where exactly to build these plants and under what conditions, and that is what is happening here," Sergio Montes, the state's deputy secretary of infrastructure and urban development, told BNamericas.

Specifically, Marathon's proposed plant location would infringe on municipal urbanization plans, Montes said. However, the oil company's blueprint is partially designed to benefit the local community, Marathon spokesperson Paul Weeditz said. "We feel that the site offers unique advantages for this project and certainly the community," he said, adding the location is ecologically friendly and is secluded from residential zones. Marathon has not made public when it will request the local land-use permit, which state officials said in interviews they would oppose based on the company's current design, and is still developing the project proposal.

The oil company aims to start construction in 2004 in time for a 2007 operational start, Weeditz said. Both sides have strong motives to establish what Weeditz called a "mutually beneficial relationship." Marathon's project includes a 750 million cubic feet a day regasification terminal and a 1,200MW thermoelectric plant, as well as a 20 million gallon a day water desalination plant and a wastewater treatment plant for city needs. "Municipalities understand the importance of this type of infrastructure," Montes said, while the state's public works secretary Arturo Espinoza said he is willing to work with Marathon to attract the investment. However, Marathon is not the only LNG player in town as ChevronTexaco is also planning to develop an LNG complex offshore Tijuana.

Indeed, a source with state energy company CFE said Mexico might scrap plans to launch bidding for a Pacific LNG terminal next year considering the number of companies jostling to build a facility in Baja California.

To that end, Marathon is discussing the project with residents, community leaders and government officials in an effort to diminish protest. "We've had a very open and consistent information campaign to address concerns or questions," Weeditz said.

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