Page 5 - LatAmOil Week 37 2022

LatAmOil COMMENTARY LatAmOil

The trouble with service contracts that it hopes to sign at least 30 service contracts
In any event, Pemex has submitted a develop- for various projects, but so far the commission
ment plan for Lakach to the National Hydrocar- has not given a green light to any of them.
bons Commission (CNH), Mexico’s national oil
and gas regulator. That development plan calls Filling a seat at CNH
for NFE to work under a service contract, as was There could change in the near future, as Roge-
the practice for Pemex’s foreign partners prior lio Hernandez Cazares, the leader of the CNH,
to the passage of wide-ranging energy reforms resigned unexpectedly at the end of August,
in 2013-2014. stepping down before the end of his seven-year
Under a service contract, NFE would be paid term, which began in 2020.
a fee instead of receiving a share of output, as Natural Gas Intelligence reported on Sep-
would be the case under a production-sharing tember 12 that Mexican President Andres
arrangement. Meanwhile, Pemex would retain Manuel Lopez Obrador had drawn up a short-
full ownership of the site and absorb all finan- list of three candidates – Romeo Antonio Rojas,
cial risks in the event that gas prices dropped Pemex’s deputy head of strategic projects and an The CNH has
below expected levels. It would also be able to engineer with experience in extra heavy crude
start work more quickly, as it would not have to oil projects; Agustin Diaz Lastra, a member of generally not
carry out a competitive public tender a different Pemex’s board of directors and an economist responded
kind of contract, such as a farm-out for an equity who has also held various public-sector posi-
stake in Lakach. tions in his home state of Tabasco; and Jose favourably to
The NOC appears prepared to confront those Sanchez Perez, the chief administrator of the
risks in exchange for the right to develop a major Tehuantepec Isthmus Corridor (FIT) railway Pemex’s request
asset on its own. project, who has a background in economics.
However, Reuters reported on September 13, At present, none of these candidates is a for permission
citing no less than eight sources close to the mat- known quantity. That is, it is not clear whether to develop fields
ter, that the commission had withheld approval any will be more receptive to Pemex’s request for
because it was not convinced that this devel- permission to proceed with development under under service
opment plan met the standard of being both a service contract with NFE.
technically and economically viable. Two of However, Lopez Obrador’s policy prefer- contracts with
the sources said that CNH members had raised ences are fairly well known. The president has
questions on economic grounds, specifically been a champion of Pemex – and a champion third parties
criticising estimated drilling costs and produc- of the idea that the state-owned company ought
tion forecasts as too high. to take a leading role in the oil and gas indus-
These critiques are not exactly surprising, try. Presumably, then, his preferred candidates
given that CNH members have said in the past would be sympathetic to this view and would,
that they favour a farm-out for Lakach because therefore, be more willing than Hernandez to
they have doubts about Pemex’s ability to carry approve the NOC’s plans.
out a deepwater project of this scope and com- Even so, it will take some time to move
plexity without a foreign partner that has rele- through the appointment and approval process,
vant experience. (The vast majority of Pemex’s and CNH cannot convene to discuss develop-
upstream operating experience comes from ment plans until all of its members can be pres-
shallow-water fields.) ent. As such, Pemex will have to wait to find
Moreover, the CNH has generally not out what Hernandez’s replacement thinks of its
responded favourably to Pemex’s requests for plan – and that probably means that there is no
permission to develop fields under service con- chance of bringing the field on stream next year,
tracts with third parties. The NOC has indicated as Romero said optimistically in July. ™

Pemex has gained its offshore experience mostly at shallow-water fields such as Ku-Maloob-Zaap (Photo: Pemex)

Week 37 14•September•2022 www. NEWSBASE .com P5