Dispute Over Mexico’s First Foreign Offshore Discovery Is Drawing to a Close
Pemex and Talos Energy have 120 days to decide how to share a massive offshore field that both companies claim they should operate. Failure to come to terms means the government will decide the matter.
Mexico’s energy regulators have informed the country’s state-owned oil company Pemex and Houston-based Talos Energy that they have 120 days to formalize a unitization agreement for a recently discovered offshore oilfield. The order is intended to end a dispute between the two companies over which one should be the operator of the field.
If the two oil companies cannot come to terms on a joint development in the Gulf of Mexico, the Mexican government will decide the matter itself.
Talos President and Chief Executive Officer Tim Duncan said in a statement that the company is “encouraged” by the government’s recent decision, adding “they have worked with transparency and in the interest of accelerating value creation through the Zama discovery.”
Duncan also said that throughout the dispute and a major drop in oil prices, Talos has continued the front-end engineering and design work so that it can remain on schedule to achieve first oil before Mexican President Andrés Manuel López Obrador leaves office in 2024.
Talos plans to develop Zama with two fixed-leg production platforms with a combined capacity of 150,000 B/D and an undefined amount of associated gas. Talos highlights that the platforms would be the deepest ever installed offshore Mexico at a depth close to 550 ft.
Pemex has not yet published an official statement on the government’s ultimatum.
The field, known as Zama, is a shallow-water prospect discovered in 2017 by Talos and a consortium that today includes German-based operator Wintershall Dea.
In addition to being the first discovery made since the opening of Mexico’s oil and gas sector in 2016 to foreign explorers, Zama is also notable for being one of the biggest finds the country has seen in decades. Estimates are that the reservoir holds 670 million BOE, most of which is oil.
But since at least 2018, Pemex has launched various efforts to lay claim to the Zama prospect after it was realized that it was a contiguous reservoir that fell below on its own exploration blocks.
In January, Talos made public the results of an independent reserves audit that acknowledged that a significant portion of the reservoir was within the Pemex block.
The report—which estimated at least 60% of Zama’s resources were held inside the Talos-operated block—was nonetheless met with skepticism and rejection by Pemex whose leadership has maintained that most of the reservoir belongs within its block.