A joint venture (JV) led by Malaysia’s Coastal Contracts Bhd has secured a roughly $1.06 billion contract from Mexican state oil company Petróleos Mexicanos (Pemex) to build and operate a natural gas conditioning plant at the Ixachi onshore gas and condensate field in Veracruz state.

The plant will have capacity to treat 300 MMcf/d of sour wet gas at Ixachi, Pemex’s flagship natural gas development. The contract period is 3,902 days, including a construction phase of 250 days and the operations and maintenance period of 10 years, Coastal said.

The JV, Coastoil Dynamic SA de CV, is a partnership between Coastal and Mexico’s Grupo Nuvoil. 

Coastal is an integrated marine oil and gas services and solutions provider listed on the Malaysian stock exchange, while Nuvoil is an energy services and solutions provider active in the upstream and midstream segments.

The EMC Papan Plant will provide gas sweetening, dehydration, dew point control and extraction of liquified petroleum gas at Ixachi, said Coastal.

Discovered by Pemex in 2017, Ixachi was Mexico’s third leading natural gas producing field in November, with output averaging 240 MMcf/d. This is below previous Pemex forecasts, which targeted peak production of 638.5 MMcf/d by 2022. 

Experts such as Pablo Medina of Welligence Energy Analytics have noted the technical challenges of Ixachi, namely its extreme depths (3.7-4.3 miles) and high pressure.

The scope of work for the EMC Papan contract includes engineering, procurement, construction operation and maintenance for the gas conditioning plant and related infrastructure. The plant is expected to begin operations in the second half of 2022, Coastal said.

The JV earlier this year brought online the 180 MMcf/d Perdiz conditioning plant at Ixachi, meaning the EMC Papan Plant will bring total capacity at Ixachi to 480 MMcf/d.

The EMP Papan Plant “is considered to be a strategic project not only for Pemex but also for the Mexico government’s aim to make gas to reach every Mexican in the country over the years to come,” Coastal said. “For Pemex, this project is attractive due to its proximity to existing gas collection, separation and measuring infrastructure as well as two major pipelines that will allow gas to flow to central, northern and eventually, [southeastern] Mexico.”

Mexico’s state power utility Comisión Federal de Electricidad (CFE) and Canada’s TC Energy Corp. have expressed interest in developing a new offshore gas pipeline from Veracruz to the Yucatán Peninsula, similar to the 2.6 Bcf/d Sur de Texas-Tuxpan pipeline which entered service in 2019.

The firm added that Ixachi “is expected to be the most productive onshore field in Mexico once it hits its peak production.”

Pemex CEO Octavio Romero Oropeza on Tuesday said Pemex is seeking to increase its production and processing of wet natural gas, and that it will resume activity at the Lakach deepwater natural gas field, a project that has been dormant since 2016.

Pemex natural gas production totaled 3.67 Bcf/d in November, up from 3.59 Bcf/d in the same month a year ago, according to upstream regulator Comisión Nacional de Hidrocarburos (CNH).

Pemex reported dry gas production from its processing centers of 2.05 Bcf/d, down from 2.2 Bcf/d in the year-ago period.