Daily Newsletter

09 November 2023

Daily Newsletter

09 November 2023

Pemex, New Fortress Energy scrap natural gas project

Pemex is now negotiating with other businesses to carry out further development of the gas field in the Gulf of Mexico.

Shivam Mishra November 08 2023

Pemex and New Fortress Energy (NFE), a US liquefied natural gas company, have scrapped a deal to build a deepwater natural gas project in Mexico, reported Reuters.

In 2022, NFE and Pemex agreed to work on the Lakach gas field in the Gulf of Mexico.

Mexican Government-backed Pemex is now negotiating with other businesses to carry out further development of the gas project, the sources said.

There is an estimated 900 billion cubic feet of natural gas in the Lakach field, which is 90km from the Gulf port of Veracruz.

However, the project has been stalled by differences over how to develop the gas field and growing expenses.

Pemex put the project on hold last month when NFE sought to impose conditions that Mexican officials deemed unacceptable, the sources said.

Among them was NFE purchasing natural gas from Pemex at a very low price, they added.

As per the other source, Lakach had grown too costly for NFE, and it would be difficult for Pemex to proceed with the project.

Requests for comments were not answered by NFE or Pemex, reported the news agency.

Mexico’s national hydrocarbons regulator (CNH) expressed worries about Pemex's ability to manage the ambitious project.

It was previously reported that Pemex and CNH officials disagreed on how to develop Lakach and other important fields.

Following a preliminary assessment, regulators discovered that the Pemex-drafted plan overstated output and had excessive drilling costs.

After Pemex's plan modification, the regulator approved the project.

Pemex had intended to deliver 110 million cubic feet per day (mcfd) of gas to the domestic market in addition to selling 190mcfd to NFE.

Production from the project was due to commence in the first quarter of 2024.

Pemex had spent $1.4bn building Lakach; subsequently, NFE committed to contributing an extra $1.5bn to match that initial investment.

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