ConocoPhillips has signed 20-year deals to receive a collective 2.2 million tons of liquefied natural gas (LNG) a year from Mexico Pacific’s Saguaro export facility, the U.S. oil and gas producer said.

Mexico is expected to soon inaugurate the first of nine planned onshore and floating LNG production facilities both on the Gulf and Pacific coasts, which will process U.S. natural gas imported through a pipeline network between the two countries.

The deals, which are subject to the project getting the final go-ahead from Mexico Pacific, would grant Conoco access to LNG from Mexico’s Pacific coast, the U.S. company said in a release.

Mexico Pacific last month announced a similar deal to supply 1 million metric tons of LNG a year to China’s Zhejiang Energy.

The Saguaro facility will process low-cost gas arriving fromthe Permian Basin through a dedicated pipeline. Most of the resulting LNG is expected to be bound for the Asian market through a significantly shorter shipping route avoiding the Panama Canal, Mexico Pacific has said.

“We are really interested in adding West Coast LNG into our portfolio,” Conoco Chief Financial Officer William Bullock told investors on Thursday on a call about the company’s quarterly results. Conoco chose Saguaro over other LNG facilities under construction in Mexico because a final investment decision on that project will come sooner, he said.

“Saguaro is in a quite competitive supply location for deliveries, particularly into Asia, and fits very nice if you think of an acquisition cost for LNG,” Bullock added.

Conoco continues to see strong demand for LNG, he said. “We are kind of laddering our build out of market and supply.”
Source: Reuters (Reporting by Arathy Somesakhar; Writing by Marianna Parraga; Editing by Jan Harvey and Richard Chang)