Page 4 - LatAmOil Week 37 2022

LatAmOil COMMENTARY LatAmOil

Lakach may be developed together with two nearby fields, Kunah and Piklis (Image: Schlumberger)
No quick start for

Lakach gas project

Pemex has said it hopes the deepwater natural gas field might start production

as early as next year, but recent developments at CNH make this outcome unlikely

MEXICO’S national oil company (NOC) Pemex prospect, as they held around 2.3 trillion cubic
reported earlier this year that it had teamed up feet (65.13bn cubic metres) of gas in addition to
WHAT: with a US-based partner, New Fortress Energy Lakach’s 1 tcf (28.3 bcm) of gas in proven and
The CNH has been (NFE), to develop Lakach, a deepwater natural probable reserves.
withholding approval of gas field located off the coast of Veracruz State,
Pemex’s development and might be able to start production as early as Still under discussion
plan for the Lakach gas next year. These are ambitious plans, but they are not set in
field. On balance, the announcement appeared to stone yet. The deal announced at the beginning
be good news for Pemex. It marked a return to of July was not a final agreement but a letter of
WHY: work at the Lakach field, a project that has been intent (LoI) signed within the framework of a
The commission has on hold for more than six years due to technical long-term strategic partnership.
doubts about Pemex’s and financial challenges. For another, it indi- In other words, Pemex and NFE have yet to
qualifications and plans cated that the NOC might have found a way to hash out all the provisions and conditions of the
to work under a service
contract. achieve its aim of developing major hydrocar- service contract under which the latter com-
bon deposits on its own, rather than bringing pany will be working at the deepwater gas field.
WHAT NEXT: foreign partners on board and making them Indeed, Reuters reported on September 13 that
The resignation of a CNH shareholders. NFE had said it was still “working on the terms”
member may clear obsta- Moreover, it signalled that Mexico was on of the deal with Pemex. The news agency also
cles to approval, but not the way to becoming a producer and not just said that the NOC and the US-based firm had
enough to enable a quick an importer of LNG. As part of the deal, NFE yet to decide how they intended to split the cost
start to production. agreed to deliver a 1.4mn tonne per year (tpy) of development, drilling and infrastructure ini-
floating LNG (FLNG) unit to Lakach. It noted tiatives at the field.
that Pemex intended to use the FLNG vessel to It is not clear whether the parties have made
liquefy most of the gas extracted from the field, any progress on this front since signing to the
leaving the remaining volumes, along with any LoI in July. Pemex’s CEO Octavio Romero Oro-
gas condensate production, available for utilisa- peza noted at the time that his company had
tion at its onshore facilities. spent about $1.4bn at Lakach before suspend-
NFE also said in July that the partners would ing work and added that the NOC and NFE had
be developing two more nearby gas fields, Kunah agreed to invest another $1.5bn in the project.
and Piklis, along with Lakach. It explained that However, he did not explain how expenses
these two sites made Lakach a more attractive would be shared.

P4 www. NEWSBASE .com Week 37 14•September•2022