Mexican President Says Billionaire Slim Wants to Join Pemex in Natural Gas Project

Mexico’s President Andres Manuel Lopez Obrador said on Friday that businessman Carlos Slim is interested in participating in the country’s first deepwater natural gas project, working alongside state energy company Pemex.

In March, Reuters reported that Pemex officials and the billionaire tycoon’s team were discussing ways to revive development of the Lakach field in the Gulf of Mexico but that other potential partners were also approached.

Pemex back then wanted to develop the offshore field using a service contract in which partners finance projects up front, a mechanism that was used prior to the country’s energy sector reforms that opened it to private participants.

“He is wanting to participate in a joint company with Pemex for the extraction of gas,” Lopez Obrador said of Slim during his regular press conference without naming Lakach or specifying terms.

A spokesman for Slim declined to comment while Pemex did not immediately respond to a request for further comment.

Slim, whose empire extends from telecommunications to mining and retail, has upped his participation in the energy sector with stakes in shallow water fields Zama, Ichalkil and Pokoch.

The Lakach project has been hailed as critical to a possible Mexican deepwater natural gas frontier and Lopez Obrador has said it could be key for supplying the country’s needs.

Pemex has made finding a new partner a top priority after its last one, New Fortress Energy, pulled out last year saying Pemex had imposed unacceptable conditions.

The Lakach project was also shelved in 2016 under a previous government for its high cost. The country’s hydrocarbon regulator, CNH, has also cast doubts over whether Pemex could handle the massive project.

Making it work has been further complicated by low natural gas prices. On Friday, LSEG data showed U.S. spot Henry Hub natural gas prices were about $2.88 per million British thermal units, less than half the price two years ago.

Experts have argued such low prices sent a clear signal that a production slowdown was needed to rebalance the market. More gas is also produced from wells drilled mainly to extract crude oil.

Shares in Slim’s Grupo Carso, the main company in his empire, fell more than 2.5% after the president’s comments on Friday.

(Reuters reporting by Adriana Barrera and Stefanie Eschenbacher. Additional reporting by Noe Torres. Editing by Stephen Eisenhammer and Rod Nickel)