Latin America’s two largest production companies, Brazil’s Petrobras and Mexico’s Pemex, have launched a technical cooperation initiative that could have significant natural gas market implications.

At a Glance:

• Petrobras brings deepwater expertise
• Lakach holds 1.1 Tcf reserves
• Pemex pursues higher gas output

The memorandum of understanding covers refining, mature field revitalization, and deepwater exploration. It could also ultimately help unlock Mexico’s vast deepwater natural gas reserves.

Petrobras is a global leader in ultra-deepwater exploration and production, with approximately 80% of its current output originating from its offshore pre-salt fields.

Following the signing ceremony in Rio de Janeiro, Pemex CEO Juan Carlos Carpio said that the partnership opened opportunities across multiple sectors, including shallow waters, heavy and super-heavy crude, natural gas, and potentially even pre-salt formations in the Gulf of Mexico.

A primary target for this cooperation could be Mexico’s crown jewel in natural gas, the Lakach deepwater gas field. Located 70 miles off the coast of Veracruz, Lakach holds an estimated 1.1 Tcf of natural gas reserves.

The field has seen nearly 20 years of delays, multi-billion-dollar investments, and abandoned service contracts due to its high technical complexity and Pemex's capital constraints.

Most recently, Mexican billionaire Carlos Slim said his Grupo Carso would not be investing in the area as had been initially hoped.

Before plans with Carso, Pemex had aimed to develop Lakach in partnership with New Fortress Energy in an arrangement that would have included a floating LNG export platform.

The news comes as Mexico tries to up its natural gas output to minimize the need to import US gas, the major input of the nation’s power generation fleet. Pemex has said that Lakach is an important part of the company’s goal to reach natural gas output of 5 Bcf/d by the end of Mexican President Claudia Sheinbaum’s term in 2030.