Mexico Energy Monitor

Mexico Energy Monitor

November 22, 2023


Pemex  said to be looking for new partners in Lakach after NFE exit 

  • Pemex reportedly is looking for new partners for the deepwater gas project at the Lakach deepwater gas field following the exit of US-based LNG player New Fortress Energy (NFE). Politica Online reported Grupo Carso and ICA as possible interested parties, without naming sources.
  • The deal struck in July 2022 would have NFE complete wells in the project Pemex abandoned in 2016, with NFE packaging extracted gas as LNG for export. That agreement fell apart over a price disagreement, said Miriam Grunstein, senior partner at Brilliant Energy Consulting and a scholar with the Center for the United States and Mexico at the Baker Institute for Public Policy.
  • Under the 2022 deal, NFE, who has no known experience drilling or developing deepwater projects, would have invested US$1.5 billion to complete work on wells in the highly complex project off the coast of Veracruz. NFE would have collected gas in part for export with Pemex taking its part in extracted hydrocarbons to supply Mexico’s ever-growing natural gas demand as the domestic off taker.
  • From what has been heard, Grunstein said, “If [Carso] were to participate, it would be with the financing of the project, because logically Carso has neither experience in deepwater drilling nor in LNG facilities.” Ostensibly, working with Carso would require bringing in another partner into the operation to do the actual work, though it is not at all clear who that might be, she said.
  • For now, she added, “What they’re doing is sitting down and sharing information about the project.” Slim, she added, “likes safe bets”, and when doing surveys, seismic, geophysical studies and the like, “it doesn’t matter whether there’s a result or not, and that’s been Carso’s main course,” she said. Taking a risk on Lakach producing results is another matter, she added.
  • “Lakach is actually extremely risky, and it is so risky, that New Fortress Energy had a disagreement on the price,” she said, though it is not clear what the specifics of that disagreement were and how the initial US$1.5 billion price point was being pressured.
  • Ultimately, she added, “For deepwater to turn a profit, oil must be part of the equation, Grunstein told MI. “Frankly natural gas from deepwater is plain insanity.”
  • “It can be done, but it’s ridiculous, [prices] would have to be sky high to be commercial,” adding this is the case even within the framework of the Russia-Ukraine crisis. “This is a project that’s about 15 years old, and no major player has expressed any interest in it.”
  • Beyond this, Montserat Ramiro (former commissioner at Mexico’s energy regulator CRE, and current board member at several major firms operating in Mexico) claimed that the government and Pemex are operating outside the legal framework for contracting upstream work in the Gulf of Mexico.

Pemex outlines new focus at Cibix with US$550mn plan 

  • Pemex recently submitted a plan to the lower house of Congress’ energy committee expressing interest in a US$551 million investment to significantly expand development at the onshore Cibix field in Tabasco state. The report outlined plans to bring the total number of wells at the site to 16 by the end of 2024, including the five already drilled, the five currently in development and an additional six pending wells with the hefty investment.
  • During its operational period, which would extend until 2035, a recovery of approximately 34.09Mb (million barrels) of oil and 65.44Bcf3 (billion cubic feet) of natural gas is anticipated.
  • At just over a half a billion dollars, the ramped-up development at the existing site is in line with Pemex’s efforts in recent years to focus production at onshore and shallow water plays, where it has the greatest amount of experience and logistical capacity.
  • However, asked about the project, Grunstein told MI, “This is secondary recovery,” adding what Pemex really needs to be focusing on is discovering new areas, adding the fact that companies like Talos and its discovery of the Zama field are an example of the fact that there are still commercial fields out there that could well be waiting to be discovered, and this needs to be where Pemex is headed.
  • Output from Mexico’s national crude oil platform, including Pemex and its private sector partners, is moving further and further away from the 2.0 million barrels per day (Mb/d) goal for 2024 established by President Andrés Manuel López Obrador (AMLO) at the start of his term in 2018, with Pemex reporting the daily average in 2023 from January to September at 1.596Mb/d.
  • AMLO has directed a significant boost in economic support for Pemex, including a reduction in its tax contribution rate (DUC) next year, before leaving office in October 2024. The DUC has fallen from 65% to 30% during the current administration. And Mexican budget analysis think tank CIEP released a report last week suggesting Pemex is no longer a positive input into government finances, calculating the NOC’s current tax contributions minus federal supports are effectively near zero.
  • “When comparing the allocation of resources for Pemex, with respect to its projected income for the year 2023, it is observed that the latter do not translate into a net contribution to Mexico’s public finances. This is because its own income, estimated at 826,492 million pesos, coincides with its operating expenses. In other words, the income that Pemex generates is completely absorbed by the expenses it incurs,” read the report.

CFE’S CEO promises 9GW new capacity in 5 years 

  • The CEO of Mexico’s public electric power company CFE outlined a rapid expansion of generation capacity nationwide in the coming years, during testimony to Congress last week. Power demand is growing quickly in Mexico thanks to a wide range of factors, including urbanization, population growth, energy transition towards electrification and climate change. Amid heatwaves in June 2023, for example, the government reported electricity consumption in Mexico rising 9% higher than the maximum demand recorded the previous year, and the power system operating reserve margin fell below 6%.
  • “The CFE, at the end of this administration, will generate 54% of Mexico’s electricity, thanks to a novel investment and financing program,” said CFE ‘s CEO Manuel Bartlett, adding that existing works would add 9GW to the national grid.
  • Among new schemes, Bartlett stressed an innovative bidding process deployed to engage intermediaries and equipment manufacturers directly, as well as a new self-financing model with low interest rates designed under his management. Among the top projects are five combined cycle plants (Mérida, Riviera Maya, San Luis Río Colorado, Tuxpan and González Ortega, giving emphasis to the aeroderivative gas turbines added at this plant in Baja California state. These projects are heavily weighted to bring new capacity to the Yucatán Peninsula and Baja California Peninsula, both geographically isolated parts of the country that are undergoing rapid development in large part due to tourism.

Permits issued to clear way for Mexico Pacific LNG project 

  • Economy minister for the northwestern state of Sonora, Margarita Vélez de la Rocha, recently reported that Mexico Pacific has secured all required approvals for the LNG export facility it plans to build in Puerto Libertad. Although construction has not yet been officially announced, Governor Alfonso Durazo is expected to make such an announcement soon.
  • The project, dubbed “Saguaro Energía LNG” hopes looks to eventually introduce 28 MTPA (million tons of LNG per annum) export capacity with phase one bringing 9.4 MTPA in two trains online by 2026-2027, followed by phase two with a third 4.7 MTPA train, and phase three with trains 4-6 amounting to a further 14.1 to 15 MTP.
  • As reported by regional media, Vélez de la Rocha confirmed she would be meeting with company representatives to coordinate an exclusive supplier expo most likely in late January.
  • The Houston-based company is set to invest US$13-16 billion in the Sonora LNG project over the next three years. However, a wide range of technical details related to logistics are still being addressed, and critics have raised concerns over construction of the 800km pipeline that would connect the site to supply from Texas. Among those criticisms expressed to MI involve the planned route of the line running through areas that have historically been contested by indigenous populations and/or have seen high levels of violence between criminal organizations.
  • Furthermore, central to that geography is the state of Chihuahua, lying south of western Texas, with that state’s governor María Eugenia Campos announcing on Monday that the state has signed an agreement with Mexico Pacific to develop the section of pipeline running through the desert state. The official presented the document signed also by Mexico Pacific CEO Ivan Van der Walt to develop the project in the state.



The International Energy Agency (IEA) has released its first ever Latin America Energy Outlook to generate insights on the region’s pathways to net-zero decarbonization hopes and realities moving towards the global target of 2050 with both positives and negatives to report for Mexico.

The IEA report explores three scenarios. It focuses on the Stated Policies Scenario (STEPS), reflecting today’s policy settings, and the Announced Pledges Scenario (APS), which assumes all pledges and targets are achieved in full and on time, including climate goals established by Nationally Determined Contributions. The APS also reflects the net zero emissions pledges made by 16 countries, including Mexico. STEPS provides a more conservative benchmark for the future than that of the APS by not taking for granted that governments will reach all announced goals. The IEA framework explores the gaps between policy and targets, or in a sense, between what governments have guaranteed, current policy, and what they aspire to reach. Progress is also benchmarked against the Net Zero Emissions by 2050 (NZE) Scenario, which lays out a pathway to decarbonize the global energy system by mid-century.

Among its findings: Mexico by far the biggest importer of natural gas in Latin America and the Caribbean (LAC), most coming from the US and chiefly Texas. Mexico imported more than 45 billion cubic meters from the United States via pipelines in 2022.  Under the STEPS scenario, natural gas imports widen further, even with natural gas production increasing nearly 25% by 2050. Under all scenarios, oil production in Mexico falls, but under STEPS it plateaus as demand remains steady. In the STEPS, natural gas and solar PV together look to meet over 95% of electricity generation growth to 2050 in Mexico.

In both the STEPS and APS, the share of fossil fuels in energy consumption in industry in Mexico remains high. In the APS, the share of bioenergy remains low compared to other LAC countries. Electrification increases in road transport after 2030 in both scenarios. In the APS, electricity accounts for over half of energy consumption in transport by 2050.

Remarkably, the IEA also found that ownership of air conditioners more than triples by 2050 and is responsible for more than 40% of the increase in electricity consumption in Mexico’s buildings sector in the STEPS. Energy-efficient appliances limit the size of the increase in the APS. However, in both scenarios, electricity consumption in buildings almost doubles from current levels. It contributes to a total peak demand increase of 40% in the APS by 2050.