Oil majors face battle over Mexico LNG plants
http://www.forbes.com/business/newswire/2004/03/05/rtr128815...
Reuters
03.05.04
By Catherine Bremer
MEXICO CITY (Reuters) - Foreign oil majors' plans to build liquefied natural gas plants along Mexico's Pacific coast are coming under increasing fire
from lawmakers and environmentalists.
Oil companies say the plants are vital to meet growing demand for gas to generate power in the United States and Mexico.
But others say the plants would disfigure Mexico's Pacific coastline and upset the local environment, wildlife and tourism, especially in the Baja
California peninsula, one of the proposed sites.
Some opponents are skeptical about how much gas would stay in Mexico, fearing the bulk will go north of the border.
"These companies are coming to do damage to Mexico without bringing a single benefit," said Francisco Carrillo, a deputy from the left-wing opposition
PRD party. The secretary of Congress' energy committee, he is seeking legal grounds to challenge the projects.
"They are dumping this on us because environmental laws are lax here," Carrillo told Reuters. "They will bring their own machines, manpower and
technicians. We don't see a positive side."
One project was scrapped this week after the state government in Baja California took back a site -- nestled between residential areas -- that
U.S.-based Marathon Oil Corp. was eyeing for an LNG plant.
Although oil majors say the plants would cause only minimal damage, environmentalists will start protesting in May, mindful of Baja California's local
elections in July.
Besides being home to one of the world's best preserved ecosystems, the peninsula is a breeding ground for thousands of gray whales, which migrate
there from January to April.
Industry watchers doubt all the projects will be shelved, but see the rising tide of opposition delaying construction and hiking costs as oil majors
make concessions to appease locals.
The LNG plants will process condensed gas shipped in from overseas and pipe it to northern Mexico and California, where supply problems triggered a
power crisis in 2000-2001.
So far only one plant has the full go-ahead -- one that Royal Dutch/Shell is building in Altamira. Shell met minimal resistance because the Gulf Coast
city is already an industrial area with a busy port.
Others -- ChevronTexaco , Repsol, Tractebel and a Shell-Sempra Energy joint venture -- are angling for three other sites along the Pacific coast.
"We are working closely with environmental groups, but we are going to face big challenges," said a source at one company.
STORM OVER CORONADO ISLANDS
The most controversial project is an offshore plant Chevron hopes to build off the tiny Coronado Islands, just south of the U.S.-Mexico border.
A group of Mexican lawmakers is mounting a campaign against the project, partly based on sovereignty issues.
Senator Manuel Bartlett of the opposition Institutional Revolutionary Party, or PRI, says allowing foreign companies to use federal waters around the
islands is tantamount to ceding national territory and violates Mexico's constitution.
Wary of any hint of privatization of the energy sector, PRI Deputy Carlos Jimenez called the LNG projects "a voracious stain spreading, almost
silently, but unstoppably".
Greenpeace is concerned about disruption to the islands, a sanctuary for sea birds and sea lions, especially during the noisy construction phase. The
environmental group says the use of seawater as a coolant could raise the ocean temperature, hurting marine life.
"None of these projects should be constructed in Mexico because the gas and electricity will not stay in Mexico," said Luis Arturo Morena, Greenpeace
energy campaign coordinator. "The plants are responding to the needs of the Californian market."
The U.S. Energy Information Agency expects demand for gas in the United States to increase tenfold by 2020 as it displaces coal as the world's No. 2
primary fuel.
For Mexico, the agency sees gas consumption quadrupling by 2025 as the industrial north needs gas-fired power to meet rising electricity demand.
While Mexico is sitting on ample gas resources, state energy monopoly Pemex is struggling to access them fast enough to meet demand. Mexico imported
14.4 percent of its gas from the United States in 2003, up from 13.3 percent in 2002.
ChevronTexaco's LNG plant would pipe gas to both Mexico and California, but the U.S. oil major could not say in what proportion.
"North America is at a supply crunch ...," a company spokeswoman said. "We think this is the best alternative."
Chevron hopes to get the necessary permits for its plant by midyear. Shell/Sempra is further ahead, with a more isolated site, and is trying to win
over environmentalists.
"I tend to think these projects will happen," said Bear Stearns analyst Alex Monroy. "American pressure carries significant weight in Mexico."
|
![[*]](images/xmbforum/default_icon.gif){kind=icon}
