"Mexico Plans to Become an Export Hub With US-Drilled Natural Gas" - Bloomberg - (See image)

[Tom Nolan + 2,443]

Sergio Chapa - Bloomberg

Fri, August 12, 2022

Mexico Plans to Become an Export Hub With US-Drilled Natural Gas

https://finance.yahoo.com/news/mexico-plans-become-export-hub-090046251.html

 

Mexico — which imports nearly all of the natural gas it burns — has laid out a somewhat surprising mission: to become one of the world’s top exporters of the fuel, and fast.

Although natural gas exports from Mexico are today non-existent, seeing as it produces too little of the power-plant fuel to supply even its own domestic needs, the country’s physical proximity to booming US reserves positions it well to supply American gas to hungry buyers in Europe and Asia. With US shale in mind, a total of eight liquified natural gas export projects have been proposed south of the border boasting annual combined capacity of 50.2 million tons. Some of the operations aim to come online as soon as next year.

If they’re all completed, the Latin American newcomer would join a very small club of nations that ship abroad the superchilled fuel — commonly called LNG — clocking in at No. 4 behind only the US, Australia and Qatar. And unlike those other three export heavyweights, Mexico would mostly be shipping out gas that it imported in the first place.

Mexico’s big plans to enter the export market come at a time when natural gas demand is soaring globally. Gas was already gaining in popularity versus dirtier fossil fuels like coal due to its comparatively lower carbon footprint when the war in Ukraine propelled demand to an entirely new level. Forty-four markets imported LNG last year, almost twice as many as a decade ago, the International Group of Liquefied Natural Gas Importers said, and the world has been racing to boost both import and export capacity in the months since. Asia has been the destination for nearly half of US LNG cargoes over the past two years, though Europe’s efforts to diversify away from Moscow means buyers in all regions are competing for a limited supply of the fuel.

“Mexico is set to become an exporter of US-produced natural gas and this is mostly driven by market dynamics that are taking place globally — especially those in Asia — not precisely due to Mexico’s policies,” said Adrian Duhalt, a scholar at the Baker Institute’s Center for the United States and Mexico at Rice University.

To be sure, there’s no guarantee all the proposed projects will be built, or that they’ll be constructed on time. Some of them will still need last-mile pipeline connections, too.

But the main gas pipeline capacity they’ll need to operate is already there. US gas can be shipped in via more than a dozen cross-border pipelines built during former President Enrique Peña-Nieto’s single term in office between 2012 and 2018. Those conduits cost billions of dollars and have a combined capacity of nearly 14 billion cubic feet a day, federal figures show. So far this year, Mexico has imported an average of 6.7 billion cubic feet per day from the US, meaning the lines could move more than double the current volumes. That’s on top of the roughly 2.6 billion cubic feet of natural gas per day Mexico produces.

Mexico’s current president, Andres Manuel Lopez Obrador, was a vocal critic of his predecessor’s policies, including the cross-border pipeline projects, which required Mexico to sign long-term take-or-pay contracts that forced it to pay for full capacity whether it was being used or not. That imported gas was supposed to supply Mexico’s internal needs, but after more than a dozen natural gas power plants got derailed before they were built, Mexico found itself paying for a lot of spare pipeline capacity it wasn’t using.

Early in his term, AMLO, as the current president is known, negotiated a deal with three pipeline operators to save the nation $4.5 billion. His administration has also pledged to build more in-country pipelines to get sufficient fuel to demand centers in central and southern Mexico that still face occasional natural gas shortages due to infrastructure issues. The rest of the imported gas would go toward making Mexico an export hub.

It’s certainly well positioned: Six of the eight LNG projects proposed in Mexico are along the Pacific Coast where cargoes can be shipped to destinations in Asia without having to go through the Panama Canal. With the exception of one offshore project in Veracruz, all of the gas for the plants would come from the US via cross-border pipelines.

Mexico’s government didn’t reply to requests for comment.

So far, the only one under construction is the first phase of the Sempra Energy-owned Energia Costa Azul export terminal along the Pacific Coast in the Mexican state of Baja California. The other projects are still on the drawing board but have seen momentum in the months following Russia’s invasion of Ukraine. New York-based LNG company New Fortress Energy Inc. signed a pair of deals in July to develop offshore LNG export projects off the coasts of Tamaulipas and Veracruz that could potentially supply Europe. Mexico’s-state owned Federal Electricity Commission said the same month that it’s looking to develop LNG export terminals in the states of Sinaloa and Oaxaca in a tie-up with Sempra. Once approval and permitting go through, most LNG projects can begin exports in roughly four years.

So if the gas getting shipped out of Mexico will be produced in the US, why not just ship it from American ports? Blame opposition at the local and state levels. Several of the proposed projects in Mexico moved forward only after Canadian pipeline operator Pembina Pipeline Corp. canceled its proposed Jordan Cove LNG export terminal in Oregon due to heavy pushback in the US.

“This speaks more about how difficult it is to build export terminals in California and Oregon that developers are trying to set up projects in Mexico,” Duhalt said.

[footeab@yahoo.com + 2,194]

Yup, brought this up years ago to one of my senators to at minimum, at LEAST forcing an export tariff tax of any NG being used in Mexico for LNG for export... crickets....  3rd world bananna republic

[Danlxyz + 65]

12 hours ago, footeab@yahoo.com said:

Yup, brought this up years ago to one of my senators to at minimum, at LEAST forcing an export tariff tax of any NG being used in Mexico for LNG for export... crickets....  3rd world bananna republic

The problem with that is Article 1 Section 9 of the US Constitution says in part

Quote

"No Tax or Duty shall be laid on Articles exported from any State."

 

Which I think would apply.

[footeab@yahoo.com + 2,194]

2 hours ago, Danlxyz said:

The problem with that is Article 1 Section 9 of the US Constitution says in part

Which I think would apply.

Are you this dumb? That is between states.  Tariffs are between countries... 

[Danlxyz + 65]

19 minutes ago, footeab@yahoo.com said:

Are you this dumb? That is between states.  Tariffs are between countries... 

This Forbes article explains it https://www.forbes.com/

Here’s What the Constitution Says about Taxing Exports

Although we have had to amend the U.S. Constitution a few times, for the most part, it has withstood the test of time. The Framers left us a document of remarkable clarity.

Article 1 defines how the legislative branch works—and Section 9 is a list of things Congress can’t do. It includes this: “No Tax or Duty shall be laid on Articles exported from any State.”

The Constitution prohibits the federal government from taxing exports. They can’t do it. Period. Court rulings over the years make this very clear.

[footeab@yahoo.com + 2,194]

20 hours ago, Danlxyz said:

This Forbes article explains it https://www.forbes.com/

Here’s What the Constitution Says about Taxing Exports

Although we have had to amend the U.S. Constitution a few times, for the most part, it has withstood the test of time. The Framers left us a document of remarkable clarity.

Article 1 defines how the legislative branch works—and Section 9 is a list of things Congress can’t do. It includes this: “No Tax or Duty shall be laid on Articles exported from any State.”

The Constitution prohibits the federal government from taxing exports. They can’t do it. Period. Court rulings over the years make this very clear.

Instead of useless forbes...

https://www.heritage.org/constitution/#!/articles/1/essays/65/export-taxation-clause

Export Taxation Clause

Article I, Section 9, Clause 5

No Tax or Duty shall be laid on Articles exported from any State.

The Export Taxation Clause was one of the many accommodations that the Framers made to cement unity among the various sections of the union. Many of the Southern delegates at the Constitutional Convention regarded the clause as a prerequisite to gaining their approval of the Constitution. As the primary exporter of goods (particularly cotton) in the late eighteenth century, the South believed that it would have borne a disproportionate burden from export taxes. In addition to the disproportionate burden argument, George Mason voiced the South’s fear that a tax on exports would create a mechanism through which the more numerous Northern states could overwhelm the Southern states’ economies. They also worried that export taxes could be used indirectly to attack slavery (because slaves were then very important in harvesting cotton). The Southerners were joined by Northerners such as Oliver Ellsworth, who declared that export taxes would stifle industry.

In response, some of the most distinguished delegates at the Convention, including James Madison, Alexander Hamilton, George Washington, Gouverneur Morris, and James Wilson, favored export taxes. They argued variously that export taxes were a necessary source of revenue for the central government, that they were an important means for the federal government to regulate trade, and that the South’s disproportionate need for naval protection justified its disproportionate share of export taxes. Attempts to limit the absolute prohibition on export taxes failed. James Madison’s attempt to require a supermajority for passage of an export tax was barely defeated by a 6–5 vote. The absolute prohibition on export taxation then passed by a 7–4 vote. It provoked little discussion during the ratifying conventions.

Scholars point out that the Export Taxation Clause was part of a complex set of compromises related to the South’s economic interest in slaves and in the products that slaves produced. They argue that inclusion of the clause was linked to the removal of a two-thirds voting requirement to pass a navigations act and the inclusion of a twenty-year limitation of Congress’s power over the slave trade (Article V).

Hrmmm why all these years did I think exports could be taxed... Always read that article as interstate...

Edited August 15, 2022 by footeab@yahoo.com

[Danlxyz + 65]

It sounds like a lot of wheeling and dealing was done to get the constitution approved.

The first time I heard about the export tax exclusion I reacted just like you. It is so different than today.

[Boat + 1,325]

You know a greenie Dem ain’t gonna let that stand. That airborne pollution will be delt with…….guessing 20 years. Nat gas be stranded assets. 

[Ron Wagner + 714]

On 8/14/2022 at 4:36 PM, Danlxyz said:

This Forbes article explains it https://www.forbes.com/

Here’s What the Constitution Says about Taxing Exports

Although we have had to amend the U.S. Constitution a few times, for the most part, it has withstood the test of time. The Framers left us a document of remarkable clarity.

Article 1 defines how the legislative branch works—and Section 9 is a list of things Congress can’t do. It includes this: “No Tax or Duty shall be laid on Articles exported from any State.”

The Constitution prohibits the federal government from taxing exports. They can’t do it. Period. Court rulings over the years make this very clear.

Could that be construed as tariffs being taxes?

[Jay McKinsey + 1,491]

On 5/31/2023 at 5:26 PM, Ron Wagner said:

Could that be construed as tariffs being taxes?

Tariffs are taxes by economic definition. 

A tariff or duty (the words are used interchangeably) is a tax levied by governments on the value including freight and insurance of imported products. Different tariffs applied on different products by different countries.

 

Import Tariffs & Fees Overview and Resources

[turbguy + 1,556]

On 8/15/2022 at 2:59 PM, Danlxyz said:

It sounds like a lot of wheeling and dealing was done to get the constitution approved.

Ahhh...

YEAH!

...and not everyone who was there at the start of the convention in Philadelphia signed it.  Some left in disgust.

...and there was PLENTY of recreational alcohol involved, as well.