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Investors Pledge US$2B In Mexico Onshore Oil

Mexico

Energy companies that took part in two onshore oil and gas exploration tenders in Mexico yesterday have pledged total investments of US$2 billion for the entire lifespan of the winning projects, said the head of Mexico’s Hydrocarbons Commission.

Juan Carlos Zapeda told media that the 21 blocks that were awarded in the two tenders would add 79,000 bpd to Mexico’s total oil production by 2025, as well as 378 million cu ft of natural gas daily. First oil and gas should start flowing in two years, he added.

The big winner of the two tenders was Mexican Jaguar Exploracion y Produccion, which snapped up six of ten blocks in the first of two auctions. The FT reports that the competition for two of these blocks was so intense that Jaguar had to fight hard for it, eventually coughing up US$26 million for one and US$29 million for the other to beat its rivals. The Mexican company teamed up with Canadian Sun God Resources for its bid.

Jaguar, set up three years ago by the former CEO of conglomerate Alfa, also won the exploration rights to five more blocks, this time on its own.

On the same day that the auctions were held, London-listed Premier Oil Plc said that together with its joint venture partners, Talos Energy and Sierra Oil & Gas, it had made a world-class oil discovery in the Zama-1 exploration well in Block 7, the first offshore exploration well drilled by the private sector in Mexico’s history.

Related: The Biggest Obstacles For China’s $900 Billion Silk Road

According to preliminary analysis, “Initial gross original oil in place estimates for the Zama-1 well are in excess of 1 billion barrels, which could extend into a neighbouring block,” said Premier, which holds 25 percent in the block.

The operator of the block, Talos Energy, which has 35 percent, was even more optimistic about the find. “Initial gross original oil in place estimates for the Zama-1 well range from 1.4 to 2.0 billion barrels, exceeding pre-drill estimates, some of which could extend into a neighboring block.”

By Irina Skav for Oilprice.com

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