US president-elect Donald Trump's pledge to lift the pause on LNG export permits to non-free trade agreement (non-FTA) countries could reshape Mexico's LNG ambitions and its role in global gas trade.
Trump, set to take office on 20 January, has vowed to reverse a decision by President Joe Biden's administration in January 2024 to halt LNG export permits pending a study on their environmental and economic impacts.
This decision directly affects all seven LNG export terminals planned on Mexico's west coast, which together represent nearly 60 million tonnes (t)/year of projected export capacity. These projects rely on permits to sell LNG to non-FTA nations, making them pivotal in positioning the US and Mexico — bolstered by prolific gas production from the Permian Basin — as a top global LNG player.
Yet, even with permitting renewed under Trump, domestic US politics could pose risks to Mexico's LNG projects.
"The US has a fundamental interest in accelerating west coast Mexican LNG development," said Joe Webster, senior fellow at the Atlantic Council's Global Energy Center. "Constructing LNG terminals in this region would address the Permian Basin's increasingly ‘gassy' gas/oil ratio while strengthening energy ties with the Indo-Pacific."
But not everyone agrees. Another market source told Argus that Trump's recent rhetoric about regaining control of the Panama Canal suggests his government may favor US-based LNG facilities over Mexican projects. Additionally, the Republican-led Congress could complicate matters. In October, Alaska Senator Dan Sullivan proposed legislation to restrict gas exports to "corrupt governments," explicitly including Mexico. With Republicans controlling both chambers, such measures could gain traction if Trump backs them to further his broader agenda.
Trump's priorities lie in migration, security and inward investment, said Duncan Wood, president of the Pacific Council on International Policy. Trump is likely to leverage US-Mexico energy relations, including unresolved US-Mexico-Canada (USMCA) trade agreement disputes, to pursue these goals.
Permit deadlines loom
Four of Mexico's seven Pacific LNG projects already hold non-FTA permits, including Alliance LNG's Amigo project in Guaymas; Sempra's ECA Phase 2, Ensenada; Mexico Pacific's Saguaro Energia LNG Phases 1 and 2, Puerto Libertad; and Vista Pacifico, Topolobampo; a joint venture between Sempra, TotalEnergies, and CFEnergia. These permits have expiration dates requiring the projects to begin operations or apply for extensions.
Alliance and Vista Pacifico hold permits valid until 2027 and 2029, respectively, but Saguaro's permit expires in December 2025, and ECA Phase 2 must begin by March 2026. Without final investment decisions, these projects risk missing their deadlines, even with Trump's Department of Energy (DOE) potentially easing extensions.
The permitting pause in 2024 may have already delayed timelines and hurt investor confidence. Whether Trump's reversal mitigates this damage remains to be seen.
Meanwhile, the Biden administration's recent study on LNG permitting warns that unchecked approvals could increase global greenhouse gas emissions and raise domestic natural gas prices. While this study may carry little weight under Trump, it could entrench anti-LNG sentiment among Democrats. Still, as US LNG exports are expected to double by 2028, Democrats with national ambitions may adopt a more pragmatic stance, Webster said.
Trump also inherits a new dynamic with Mexican President Claudia Sheinbaum. Initial interactions between the two have been cordial but tense. "Mexico's stance on US LNG exports remains unclear," Webster said. While Sheinbaum aligns with environmental movements, her pragmatic streak may lead her to use LNG projects as leverage in negotiations with Trump.
