Page 5 - LatAmOil Week 40 2022

LatAmOil COMMENTARY LatAmOil

These plants would be built on the coast of or will not be assigning an equity stake in the pro-
within the waters of the Gulf of Mexico, whence ject to a foreign partner.
LNG could be loaded on tankers and shipped
across the North Atlantic to Europe. Outstanding questions
For example, Natural Gas Intelligence (NGI) In other words, Pemex may want to produce
reported in late September that Lopez Obrador LNG and see Lakach as a suitable source of feed-
has suggested a tie-up with the 1.3 bcf (36.81 stock for a gas liquefaction facility, but it has yet
mcm) per day Southeast Gateway pipeline pro- to answer all the questions about how and when
ject. He pointed to the port of Coatzacoalcos in this will happen.
Veracruz State, one of the locations where the And more broadly, Pemex’s parent organisa-
pipeline is due to make landfall, and described it tion, the Mexican government, has yet to address
as an ideal place for an LNG terminal. similar questions that are likely to emerge about
This site would ensure adequate supplies of other ideas that are being put forward for the How do plans
feedstock for an LNG plant, as it would allow establishment of LNG plants in or on the coast
access to a pipeline carrying gas from Texas, the of the Gulf of Mexico. With respect to NFE’s to work with
president asserted. It would also give the termi- interest in Altamira, for example, Mexico City
nal access to production from offshore fields, may have promised to facilitate the permitting foreign partners
as Veracruz is Mexico’s biggest gas-producing process for Fast LNG units, but can it ensure that
state, he said. He put the cost of building an LNG CFE’s willingness to co-operate? After all, a sub- fit in with AMLO’s
plant at Coatzalcoalcos at $4-5bn but did not say sidiary of the utility has been battling with its US preference for
how long it might take to build it or exactly how partners over the terms of gas pipeline contracts
much LNG it might turn out. for several years. ensuring that
NGI also made note of proposals by the US Moreover, how do these plans to work with
company New Fortress Energy (NFE) to use gas US partners – and with infrastructure built to state-owned
pumped through the 2.6 bcf (73.63 mcm) per handle US-produced gas – fit in with Lopez companies like
day Sur de Texas-Tuxpan pipeline to the port Obrador’s frequently (and strongly) expressed
of Altamira in Tamaulipas State as a source of preference for ensuring that state-owned giants Pemex and CFE
feedstock for three Fast LNG units. NFE had such as Pemex and CFE always play the leading
said earlier this year, after signing a letter of role in Mexico’s energy sector? How does the stay in the lead?
intent (LoI) with Mexico’s national oil company president propose to achieve his policy aims
(NOC) Pemex on the Lakach offshore gas pro- while also working closely together with US
ject, that it might eventually deploy as many as partners, when in the past those policy aims
four Fast LNG units in the Gulf of Mexico. Only have often led him to take steps to keep US com-
one of these 1.4mn tonne per year (tpy) units is panies from gaining too much of a foothold?
supposed to go to the Lakach field, though, so And can he pursue such an agenda without
the other three could be stationed at Altamira. running up against the terms of the US-Mexi-
If so, they would effectively establish a floating co-Canada Agreement (USMCA) on free trade?
LNG (FLNG) plant with a production capacity There are no answers to these questions yet,
of 4.2mn tpy in about 14-16 months. but questions are sure to arise if Mexico seeks
NFE has yet to strike a deal with the Fed- to move forward with efforts to supply LNG to
eral Electricity Commission (CFE), Mexico’s Europe. And there will be time for them to arise,
national power provider, on this project. (CFE as none of the LNG projects mooted thus far can
will have to be involved because it is the only be executed in less than 14-16 months. ™
party to hold capacity in the pipeline.) The US
company is optimistic, though, as it has secured
a pledge from Mexico’s government to expedite
permits for the Fast LNG units. Additionally, it
has noted that CFE stands to benefit from the
project, as it is only utilising 20% of the pipeline’s
capacity at present.

Mexican gas production
Meanwhile, NFE’s plans for restarting work at
Lakach also incorporate LNG production.
As previously mentioned, the US company
has indicated that it intends to station a 1.4mn
tpy Fast LNG unit at Lakach, which lies off the
coast of Veracruz State. Pemex is hoping to
develop the field together with two nearby sites
known as Kunah and Piklis; altogether, the three
may hold about 3.3 trillion cubic feet (93.45
bcm) of gas.
The NOC has claimed that the work already
done in the area could help launch production
as soon as next year. However, it is far from clear
that this timetable is realistic, since Pemex has
little experience in deepwater development and Lakach may be developed together with the Kunah and Piklis fields (Image: Pemex)

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