Transition Industries signed a long-term natural gas supply contract with state-owned CFEnergía for its Pacifico Mexinol project, which is set to produce up to 1.8 million tonnes of blue methanol and 350,000 tonnes of green methanol annually.

Around 160 million cubic feet per day of US natural gas will be supplied to the project, to fuel the methane reforming paired with carbon capture that would feed the blue methanol portion of the project.

The company said this deal represented the “final outstanding commercial milestone” for the project near Topolobampo, Sinaloa, allowing construction to begin.

“This contract reinforces Mexinol’s position as a key strategic investment, strengthening the long-term industrial competitiveness of Mexico and the state of Sinaloa,” said Transition Industries CEO Rommel Gallo.

With operations expected to begin between late 2029 and early 2030, Japan’s Mitsubishi Gas Chemical has committed to buying around 50% of the project’s output.

Green methanol will be produced with hydrogen made by a 210MW electrolyser, currently being engineered by Siemens Energy and Techint Engineering & Construction.

Due to its location on Mexico’s northwest coast, Transition Industries said the plant would be “well-positioned” to meet emerging demand for clean methanol across the Pacific.

In addition to its traditional chemical industry use, clean methanol is being pursued as a future fuel for the shipping sector.

However, like many green alternatives, the chemical continues to face higher production costs and tougher offtake negotiations than unabated methanol.