Mexico Talks Have Potential for Aussie LNG to N. America

Australian liquefied natural gas (LNG) suppliers seeking potential contracts worth $50 billion over 20 years into Mexico and the west coast of the United States may be able to start deliveries as early as 2009.

Federal Industry Minister, Ian Macfarlane, is in Mexico and California meeting with government and industry about the potential for Australia to export LNG into the Mexican and US markets. "By 2015, the west coast of North America could be importing between 10 and 14 million tonnes of LNG a year, just to keep up with demand. Mexico appears to be currently leading the race to get the first receiving terminal built on the west coast."

"Australia is in a strong position to satisfy this demand into either California or Mexico. Our main concern is that this side of the American continent is soon equipped with the infrastructure necessary to source gas from Australia," he said.

Mr Macfarlane this morning (Australian time) travelled with industry representatives to Baja California in Mexico where there are plans to build LNG receiving terminals both onshore, near Ensenada, and in offshore waters.

The two LNG terminals, proposed by Sempra Energy and ChevronTexaco, have received key approvals from Mexican authorities, ahead of a number of consortia who are seeking similar approvals in California.

"Based on current demand projections, the Mexican and west coast US markets could economically sustain at least two LNG terminals in the short term. Australia is ready to assist with these looming energy challenges in Mexico and California."

"However it's now necessary that plans for the necessary import infrastructure proceed swiftly, to keep supply aligned with customer demand," he said.

California is considering whether it will allow a receiving terminal to be built on or offshore California. There has been strong community opposition to the proposals but California is the US's second largest user of gas.

Mr Macfarlane will meet with California Cabinet Secretary, Terry Tamminen and Secretary for Resources, Mike Chrisman, on Saturday (Australian time) for an update on the Californian situation.