Mexico's Pemex, billionaire Slim renegotiate deepwater gas project

Five sources with knowledge of the situation said that the team of Mexican billionaire Carlos Slim and the state energy company Pemex were discussing significant changes to the deal to develop Mexico's first deepwater gas field.

Grupo Carso, Slim's Mexican holding firm, signed a partnership agreement with Pemex last year in order to jointly develop the Lakach oil field in the Gulf of Mexico. The deal was made to revive the project that the state-owned company had twice abandoned due to high costs.

Mexico-U.S. relations have been strained since then by President Donald Trump's threats to impose tariffs, deport masses and launch military strikes against cartels.

The Mexican government, led by President Claudia Sheinbaum, has responded to this situation with a redoubling of efforts that began during her predecessor's first term as president, in order to wean Mexico off its dependence on gas imported from the United States.

Sources said that representatives of Pemex, Grupo Carso, and other companies have discussed various schemes to make Lakach more profitable at a lower price for gas than what they initially predicted.

Four sources stated that Grupo Carso is looking to expand the project by adding two fields nearby with similar resources expected, Piklis Kunah.

Uncertainty surrounded the amount that the addition of two fields would increase the cost for an investment, sources said, that would give Slim a substantial political influence.

Pemex didn't immediately respond to an inquiry for a comment. Slim's spokesman declined to comment.

They asked to remain anonymous because they weren't authorised to publicly speak on the subject.

Slim has increased his energy investments over the past few years. He now holds stakes in Zama, Ichalkil, and Pokoch, shallow-water oil fields.

Sheinbaum’s government declared Piklis, Kunah and each of their two wells strategic priorities last year. Pemex is aiming to increase its overall gas production from 3.7 billion cubic feet per a day to 5 billion.

Three sources confirmed that Slim's team floated the idea of pulling out or putting the project on hold, as part of their negotiation strategy to get a better deal.

According to official records, earlier development plans for this field called for a production period of only eight years and a start-up in 2026. Sources said that timeline is unlikely.

A field located 90 km (56 miles), from Veracruz Gulf Port, is estimated to contain 900 billion cubic foot of gas.

Another source who looked at the development plans said that Lakach needed a lot more investments. The existing well is not under pressure, which makes production difficult.

Official records indicate that seven more wells were abandoned in 2007 because they failed to produce gas.

Pemex spent $1.4 billion so far and has been authorized by regulators to spend an additional $400 million.

The drop in gas prices has made it more difficult to make the investment profitable.

One source said that the benchmark Henry Hub Natural Gas Spot price is around $3 per million Btu. This is down by about a third compared to a year earlier and far below the initial assumption of $6 per million Btu for the project.

DEEP FREEZE

Mexico's energy independence is not just about the possibility of Trump returning to power and reshaping relations between the two countries.

The north has been unable to supply. A deep freeze in Texas in 2021 caused energy outages that lasted for more than a week. Republican Governor Greg Abbott ordered its natural gas suppliers not to ship out of the state.

Exports of gas via pipeline to Mexico fell by approximately 75%.

It is not easy to develop Mexico's resources.

Pemex is looking to develop an offshore field by using a service agreement where partners fund projects in advance. This was a method used before the energy sector liberalization of the country, which Sheinbaum’s predecessor, who was a resource nationalist, curtailed.

In order to develop Lakach, private companies will need both expertise and resources. The government has been trying to limit their participation in recent years.

Sources said that another problem is the lack of infrastructure for piping the gas away.

The plans to produce gas were initially shelved by New Fortress Energy in 2016 and again in 2023 after the company pulled out. (Reporting and editing by Christian Plumb Simon Webb Barbara Lewis and Christian Plumb)

(source: Reuters)