New Fortress to develop set of gas projects with Mexico's Pemex and CFE

US-based New Fortress Energy on July 5 announced a set of natural gas projects with Mexican state companies Pemex and CFE that could increase Mexico's domestic production, reduce the country's dependency on imports from the US and help it improve its finances.

New Fortress will partner with Pemex to develop Lakach deepwater gas field off the coast of Veracruz in southeastern Mexico and will expand its gas supply to CFE power plants in Baja California Sur, the company said in statements on July 5.

The statements follow public announcements of the projects made by President Andres Manuel Lopez Obrador on July 1 during the inauguration of the country's seventh refinery, Dos Bocas, in the state of Tabasco.

The Lakach project was suspended for over six years during the previous administration after an investment of roughly $1.4 billion, Pemex CEO Octavio Romero Oropeza said on July 1 during the inauguration of the refinery.

New Fortress will use its own technology, which is "a perfect match" for the characteristics of the site, to complete the seven exploratory wells installed by Pemex, Wes Edens, CEO and chairman of the board said July 5 during a conference call with investors.

As the company will put in place the gas treatment plants and split the production, Pemex can use its share to meet the domestic demand, while New Fortress can export its share, Edens said.

"We believe this model will be significant around the world," he said, adding that he expects the project to be operational by the end of 2023.

New Fortress also announced that through its LNG regasification terminal in the port of Pichilingue in the state of Baja California Sur, which started operations in July 2021, it will expand and extend the company's supply of gas to the two power plants owned by the state utility CFE in the region: CTG La Paz and CTG Baja California Sur. Additionally, New Fortress will sell its own 135 MW power plant in the city of La Paz to CFE.

The addition of the power plant to CFE's generation fleet is expected to enhance system reliability, reduce cost and complement CFEs steps to lower emissions, the company said in the release.

New Fortress has also agreed to build an LNG export hub off the coast of Altamira, Edens said during the call.

Under the agreement, CFE will provide the gas, which it imports from Texas through a marine pipeline, while New Fortress will deploy floating LNG units, the company said. CFE would have a share in the production and will do marketing of a portion of the LNG volumes, it said.

"The impact of these three transactions is life-changing," Edens said during the call.

In March, New Fortress said it had filed permit applications for two fast LNG units in the US state of Louisiana to provide more US LNG to Europe and help it reduce its dependence on Russian gas.

Edens said there are still questions about the deals, but signing the agreements signifies that the companies are advancing.

"Given the state of the world, we want to bring them to life as soon as possible," he said.