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Pemex signs LoI with NFE on

Lakach deepwater gas project

CONTRACTS MEXICO’S national oil company (NOC) Pemex production might begin at the field. However,
is set to resume work on the Lakach natural gas Romero stated on July 1 that the additional
field after a hiatus of more than six years under funds would allow Lakach to come on stream
a letter of intent (LoI) signed with its US-based next year. “With the collaboration of the entities
partner New Fortress Energy (NFE). and regulatory bodies of the federal government,
Pemex’s CEO Octavio Romero Oropeza this project will finally start production in July
announced the signing of the LoI on July 1. He 2023, and in this way the investment made will
did not reveal full details of the document, but he be recovered,” he said.
did say that the NOC and its partner had agreed The Pemex chief also blamed previous gov-
to invest $1.5bn in the Lakach project, in addi- ernments for the long delays in the development
tion to the $1.4bn that Pemex already spent there of the deepwater field. He described the pro-
before suspending work. ject as one of many “pending issues left by past
NFE, for its part, issued a statement con- administrations” on which large amounts of
firming Pemex’s announcement on July 5 and money had been spent with “null results.”
revealed some details of the deal. It said it had Lakach was discovered in 2007. It lies off the
agreed to complete seven offshore wells at Lak- coast of Veracruz State in 988-metre-deep water
ach over the next two years and would also and may eventually yield 400mn cubic feet
deliver a 1.4mn tonne per year (tpy) floating (11.3mn cubic metres) per day of gas.
LNG (FLNG) unit to the field. The FLNG vessel Pemex initially sought to develop the field
will liquefy most of the gas extracted from Lak- on its own. However, it encountered many chal-
ach, leaving the remaining volumes, along with lenges, as it had no direct experience working in
any gas condensate production, available for uti- deepwater environments and was not working
lisation at Pemex’s onshore facilities, it explained. with a foreign partner. As a result, when Pemex
“NFE and Pemex believe the Lakach field sought to rein in upstream spending in 2016, it
will yield approximately 10 years of production, was included on a list of fields where upstream
with the possibility of significantly extending operations were to be halted.
the reserve life if nearby fields are developed,” Meanwhile, the NOC’s management deter-
it added, referring to two sites known as Kunah mined that the project was unlikely to succeed
and Piklis. NFE explained that these two sites without assistance from an outside investor, but
made Lakach a more attractive prospect, as they it did not make the decision to seek a partner
hold around 2.3 trillion cubic feet (65.13bn cubic until last year. Romero announced the compa-
metres) of gas in addition to Lakach’s 1 trillion ny’s plans in December, saying that Pemex was
cubic feet (28.3bn cubic metres) of gas in proven looking to establish an “association with private
and probable reserves. sector firms” and expected to “be able to recoup
The NFE statement did not say exactly when not all but most of its initial investment.”™

P6 www. NEWSBASE .com Week 27 08•July•2022