US-based New Fortress Energy (NFE) has partnered with Mexico’s state-owned oil company Petróleos Mexicanos (Pemex) to develop and operate an integrated upstream and natural gas liquefaction project off the coast of Veracruz, Mexico.
Under the terms of the long-term partnership, NFE will complete the development of the Lakach deepwater natural gas field in the Gulf of Mexico by drilling seven offshore wells for two years.
NFE, Pemex partner for Lakach gas field development. (Credit: Ben Wicks on Unsplash)
In addition, the company will deploy its 1.4 million tonnes per annum (MTPA) Sevan Driller FLNG unit for the Lakach field to liquefy the majority of the produced natural gas.
The Sevan Driller FLNG is currently undergoing conversion in a shipyard in Singapore.
NFE chairman and CEO Wes Edens said: “This arrangement represents the first of what we consider to be an ideal formula for the deployment of NFE’s FLNG units to stranded gas plays around the world – one that combines gas for domestic use with low-cost supply for LNG export into global markets.
“Over the last several months, we have enjoyed the opportunity to expand our relationship with Mexico’s leading energy companies.
“We appreciate President López Obrador’s continued interest in and support of our development process and look forward to delivering reliable solutions that enhance energy security for the people of Mexico and our customers around the world.”
In addition, NFE will provide upstream services to Pemex, and can produce natural gas and condensate, in exchange for a fee for every unit of production unit delivered to Pemex.
The fee is finalised based on a contractual formula that is similar to industry-standard gross profit-sharing agreements between NFE and Pemex.
Also, NFE holds the right to purchase adequate gas for its FLNG unit, while Pemex can sell the remaining natural gas and all the produced condensate to its onshore customers.
Pemex CEO Octavio Romero Oropeza said: “Pemex is pleased to finalize this strategic partnership with NFE, a leading energy infrastructure company.
“We believe this partnership will enable Pemex to efficiently leverage our domestic natural gas resources, fulfil Mexico’s security of supply targets, and facilitate gas-fired power infrastructure development in the region.”
The Lakach deepwater natural gas field was discovered by Pemex in 2007 and has seen significant exploration and development activities subsequently.
In 2014, Pemex stopped allocating capital to the field and suspended further development. The Mexican government has recently re-stated the development of Lakach.
The field is expected to yield about 10 years of production, with the potential to significantly extend the reserve life based on the development of the nearby Kunah and Piklis fields.