EconomyFinancialPemex's alliance with NFE will extract gas for domestic...

Pemex's alliance with NFE will extract gas for domestic use and export

The company New Energy Fortress (NFE) announced an agreement with the state oil company Pemex for the joint development of the Lakach deepwater natural gas field, the majority of which will be liquefied for the export market by the US company, while that the rest will be used by the Mexican state company for consumption in the domestic market.

Through this alliance, which is part of the series of announcements made last Friday during the inauguration of the Olmeca refinery in Tabasco, New Energy Fortress will invest in the continued development of the Lakach field for two years by completing seven offshore wells. In this way, Pemex will also keep the volumes of condensates associated with production.

“The technology we’ve developed ties in perfectly with what’s been found in the region,” Wes Edens, president and CEO of New Energy Fortress, said in a conference call with investors Tuesday. “The gas will be treated and split. Some will go overland for domestic use, which is great for Mexican consumers, and some will be liquefied.”

The director considered that this model is “greatly attractive” given the potential of gas resources found on the coasts of the region, which coincide with places “where there is a great need for gas for domestic consumption”, a problem that the The federal government has sought to confront through projects such as Gas Bienestar, a subsidiary created with the aim of curbing rising prices.

Edens estimates that the production of the field will be in operation by the end of the following year, a period in which consumers could also begin to receive gas for their domestic consumption.

Lakach is a deepwater natural gas field that was discovered in 2007, one of the largest unassociated in the Gulf of Mexico with a total of 1.1 trillion cubic meters of original gas in place, located about 70 kilometers from the Veracruz coast.

The companies estimate that the Lakach field has a potential of approximately 10 years of production, with the possibility of extending its useful life of the reserve if nearby fields are developed.

Taking into account the nearby undeveloped Kunah and Piklis fields, New Energy Fortress estimates that there is a total resource potential of 3.3 trillion cubic meters, making it one of the “most important undeveloped offshore gas resources in the Western Hemisphere.”

CFE will buy a plant in Baja California

The agreements also contemplate two transactions of the Federal Electricity Commission (CFE) with New Fortress Energy in La Paz, Baja California Sur, and Altamira, in Tamaulipas.

In La Paz, CFE and New Fortress Energy will extend the term of a gas supply agreement to CFE’s power generation facilities in the region, such as the La Paz and Baja California Sur turbogas plants.

In addition, the US company will sell its 135 MW power generation plant in La Paz to the CFE, with which the Mexican state company hopes to reduce costs and advance in the use of renewable energy resources and reduction of emissions in the region.

“There are still details that are being worked out in terms of the price of the asset, gas supply, etc. But I am very optimistic given the conversations we have had with the president, with the director of the CFE, and others with whom we feel very good about the agreement we have reached in commercial terms in the short term,” Edens said.

The companies will also collaborate to create a new liquefied natural gas hub off the coast of Altamira. Through this partnership, New Fortress Energy will deploy multiple production units that will utilize CFE’s existing firm pipeline transportation capacity to deliver feed gas volumes to New Fortress Energy.

CFE would participate in the production and commercialization of part of the liquefied natural gas volumes of the new complex.

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