Mexican newspaper, El Universal, said the government wanted to diversify the country’s sources of natural gas to reduce vulnerability to US price spikes.

State-owned petroleum company, Pemex, was currently talking to private companies about producing gas jointly overseas, according to El Universal.

Several LNG terminals have been planned for Mexico, and overseas gas projects would be likely to be linked to LNG importation, giving Pemex upstream and downstream stakes.

Planned Mexican LNG terminals include the Royal Dutch/Shell Group and Sempra Energy JV’s construction of a US$600 million facility in Baja California, slated for first production in 2008. This was given the green light in October last year, but has faced opposition from environmental groups.

Two other approved projects include a US$800 million Sempra Energy onshore terminal and a $650 million ChevronTexaco platform to be secured to the ocean bed.

Shell has already committed to taking its share of gas from the Gorgon LNG project off Western Australia's North West Shelf through the Energia Costa Azul terminal in Baja California, where it holds 50% of the capacity rights.

Similarly, Chevron plans to use its share of LNG from Gorgon for its proposed terminal offshore from Tijuana.

Mexico is not the only country looking overseas to control the entire LNG process. China, India and Japan are also recognising the benefits of capturing both upstream and downstream equity by investing in overseas LNG projects.

In Australia alone, Japanese companies have taken equity in the North West Shelf, China’s CNOOC is considering taking a slice of the Gorgon Gas Project, while Indian giant ONGC has said it was interested in taking equity in a major LNG project.