In 2006, Pemex found a huge natural gas field that it could not exploit. His savior is unexpected: Carlos Slim

Carlos Slim, the richest man in Latin America, will invest more than 1 billion dollars in the reactivation of Lakach, a project to extract natural gas from the depths of the Gulf of Mexico that had been stalled for years.

A failed project. Discovered in 2006 by the state company Pemex, Lakach is a huge deposit of 25,000 million cubic meters of natural gas located 1,200 meters deep and 90 kilometers from the port of Veracruz.

Natural gas is a scarce resource in Mexico due to its historical preference for crude oil, and Lakach promised to be the jewel in the crown. Pemex initially invested 1.4 billion dollars, but the company’s financial situation and the lack of interest of other investors meant that the field was finally abandoned.

Why did he throw in the towel? Lakach faced two major barriers from the beginning: the need for high investment, since it is at great depth, and low gas prices, especially compared to gas imported from the United States.

US gas has saturated the market and left Lakach with questionable profitability; That is, an extraction cost higher than the price at which it could be sold.

The resurgence of Lakach. It has been the Government of Mexico that, in an effort to revitalize the country’s energy resources, has reached an agreement with Carlos Slim’s conglomerate to reactivate the project.

The Mexican businessman’s $1 billion should be enough to move forward with a project that has been stalled since 2016, and that not even the British Shell and the American New Fortress Energy (NFE) managed to reactivate after several approaches with Pemex.

With a net worth close to $100 billion, Carlos Slim is the richest person in Mexico and one of the richest in the world. In the past he has been critical of the policies and regulations of Mexico’s energy sector, which in his opinion limit competition and efficiency.

Strategic importance. The reactivation of Lakach has important economic and strategic implications for Mexico, which has seen a decline in its natural gas production and an increase in its dependence on imports from the United States: in 2010, Mexico produced more than 170,000 million cubic meters per day . Today it produces 139,000 million.

As for Slim, his investments in the energy sector are not new (the magnate participates in the construction of gas pipelines, rental of oil platforms and crude oil exploration), so his participation in this project is a sign of confidence.

Image | CDMX Ministry of Culture, David Martin Davies (CC BY-NC-SA 2.0)

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