Key points
- Mexico and Argentina have proposed significant liquified natural gas (LNG) export capacity additions that could make Latin America and the Caribbean a major exporting region.
- Largely reliant on gas from the U.S. Permian basin, Mexico’s planned buildout is estimated at US$54.3 billion and is the third-largest slate of such projects in the world, with a total capacity of 73.6 million tonnes per annum (mtpa).
- The US$30 billion, 30 mtpa Argentina GNL Terminal is one of the largest export facilities ever considered and is associated with a host of environmental and social risks.
A rash of new LNG terminals and gas pipelines threatens to saddle Latin America with costly stranded assets and exposure to energy price swings, in spite of the region’s vast renewables potential, finds a report from Global Energy Monitor.
Data in the Global Gas Infrastructure Tracker show planned LNG export and import terminals in the region totalling an estimated US$123.6 billion in new investments, much of which are concentrated in three countries: Mexico, Argentina, and Brazil.
New LNG export projects have a high likelihood of becoming stranded assets if countries meet their own climate objectives, and recent geopolitical events, including Russia’s war in Ukraine, have demonstrated the volatility and unreliability of LNG imports.
All of these expansions to the region’s role in the LNG economy are planned despite the International Energy Agency’s warning that the global LNG trade should peak in the middle of this decade for the world to meet its climate goal of limiting global warming to 1.5℃.
Latin America’s LNG buildout faces significant barriers, however, and is by no means certain to advance. Given the region’s abundant renewable resources and its progress planning new renewable energy projects, countries could avoid sinking investment into the global LNG boom and focus on developing clean energy.
Robert Rozansky, Global LNG Analyst at Global Energy Monitor, said “Latin America already has one of the cleanest electricity mixes in the world, so rushing headlong into the LNG economy would be a mistake. The silver lining is that many projects are still in the planning stages, so the region has an opportunity to sidestep the global LNG boom and avoid weighing down economies with risky fossil fuel investments. The smarter bet is to double down on the region’s vast wind and solar potential.”
