Mexican state energy firms reveal US$12.5bn in new projects

Mexican state oil and gas giant Pemex and federal power company CFE are taking big steps towards the construction of four key projects totaling investments of at least US$12.5bn.

All the projects, which include the construction of a new natural gas liquefaction unit in Baja California Sur and a long-abandoned deepwater field, will be developed through direct private partnerships, according to the heads of both firms.

The announcements were made during the opening of the still-under-construction US$12bn Olmeca (formerly Dos Bocas) oil refinery in Tabasco state on Friday, when Pemex CEO Gustavo Romero Oropeza signed commitments with top executives from ICA Fluor and New Fortress Energy shortly after CFE’s chief executive Manuel Bartlett signed deals with New Fortress Energy and Trans Canada (TC Energy).

With New Fortress Energy, Pemex has plans to jointly invest US$1.5bn in the development of its long dormant Lakach deepwater field, which was suspended in 2016. The national oil company announced it planned to revive the project late last year but lacked a partner at the time. 

Lakach, located off the coast of Veracruz state, was considered unviable at the time after the company had invested US$1.3bn in its development.

The second Pemex project is the long-announced additional coker unit at the Salina Cruz refinery in Oaxaca state. According to Pemex, it will sign a turnkey contract with ICA Fluor to build the plant, which will require investments of US$3.8bn.

Pemex has recently invested heavily in upgrading its refining capacity, including US$596mn for Shell’s interest in the Deer Park refinery in Texas, over US$1.2bn to overhaul its six refineries (excluding Olmeca), US$4.5bn to add a new coking unit to its Tula refinery in Hidalgo state, and at least US$12bn to build Olmeca, which the government expects will be operational but at less than full capacity next year.

CFE, meanwhile, said it would build a new underwater pipeline in partnership with TC Energy for total investment of US$5bn. The project will connect the port town of Tuxpan in Veracruz state with Coatzacoalcos to the south and then with the port of Dos Bocas, Tabasco state, to the east.

According to CFE, the company's deal with TC Energy will also unify all gas transport contracts the state-owned firm has with the Canadian operator in central Mexico, under subsidiary TGNH, into a single contract with a unified price.

CFE will have a 15% share in the new partnership, and its participation in the new pipeline will rise to 49% once its transport contract ends, after 33 years of operations.

The company’s second project involves a partnership with New Fortress Energy to build a US$2.2bn liquefaction plant in Baja California Sur state. The utility said it would have a 10% share in the first unit, 15% in the second and 20% in the third, as well as have access to a new power generation unit included in the project.