Pipeline delay signals new setback to Mexico's US$15bn LNG project

US pipeline operator Oneok has asked for three more years to put the Saguaro Connector natural gas pipeline into service, in another blow to the giant Saguaro Energía liquefied natural gas (LNG) export project on Mexico’s Pacific coast.

The Saguaro Connector is designed to connect with a proposed pipeline on the Mexican side of the border and provide the LNG project with almost three billion cubic feet per day of natural gas to liquefy and export.

Mexico Pacific, the developer of the LNG plant in Sonora state, has not reached a final investment decision (FID). The company has struggled to raise financing for the plant, amid doubts about the security of gas supply and growing opposition from environmental groups.

In June 2025, Mexico Pacific asked the US department of energy (DOE) for a seven-year extension to the deadline for commencing exports, from December 2025 to December 2032.

In a letter to the Federal Energy Regulatory Commission, Oneok said the 1,000-foot-long, 48-inch-diameter natural gas pipeline will likely not be in service by February 2027.

Oneok said it is in negotiations with other companies interested in using the pipeline.

"Good cause exists to grant Saguaro an extension of time to obtain financing for the project and ensure adequate market demand exists."

"Saguaro needs additional time to discuss its financing options with interested shippers."

Progress

In its semi-annual report to the DOE, published in April, Mexico Pacific (MXP) said the Saguaro Energía project "is aligned with President Trump’s desire to "unleash US LNG" and provides an alternative westward direction to evacuate Permian natural gas to the US’s allies and customers in the global LNG market."

"MXP is currently engaging with potential equity partners and other financing sources for the MXP project and expects to make further progress in the coming months."

Saguaro Energía aims to liquefy about 15 million tons per year of natural gas, mainly for export to Asia. Capital expenditure is estimated at US$15 billion (bn).

(The original version of this content was written in English)