INCREASED RISK TO BAJA LNG FOR THE WEST

On Monday, March 1, Mexico's Baja California Norte state government expropriated Marathon's proposed site for a liquefied natural gas (LNG) regasification complex. The Marathon project and other proposed LNG terminals on the Baja peninsula have been facing growing opposition from residents and environmental groups. It is too early to tell whether the actions of the Baja California Norte government will lead to broader LNG project delays or cancellations. However, CERA believes that long delays or cancellations would have important implications for the Baja peninsula and western United States gas and power markets:

- impacts to the prospects of other LNG projects under development in the western United States and Mexico
- higher natural gas prices in Baja California and the western United States
- impacts on locations and technology choices for new electric generating capacity in the western United States and Baja California Norte

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CERA Reports Online, a wholly owned subsidiary of IHS Energy, is a leading advisor to international energy companies, governments, financial institutions, and technology providers. CERA delivers critical knowledge and independent analysis on energy markets, geopolitics, industry trends, and strategy. CERA's expertise covers all major energy sectors--oil and refined products, natural gas, and electric power--on a global and regional basis.