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Chevron and Spain’s Repsol have quit exploration at two offshore blocks in Mexico waters after early work suggested there are not enough resources to make it worthwhile to continue.
The two had won the rights to explore the blocks at a tender during the tenure of Mexico’s previous administration, Reuters reported.
Now, Chevron told the Mexican energy regulator its work at the deepwater block offshore the state of Tabasco had yielded no promising results, while Repsol never conducted any meaningful exploration work at the shallow-water block it had won, according to the Mexican hydrocarbons commission—the industry regulator.
The two are only the latest in a list of foreign oil companies that won exploration rights in the recent past and are now returning them, Reuters noted in its report. The list includes BP, Shell, and TotalEnergies, with some companies returning more than one block to the state.
The Pena-Nieto government had major ambitions about Mexico’s oil industry, leaning hard on foreign supermajors to spearhead a surge in production. However, the number of actual discoveries has been smaller than hoped for.
One of these, however, is moving ahead. The Trion field was discovered in 2012 and recently got the final go-ahead from its majority shareholders, Australia’s Woodside Energy. Woodside owns 60% of the Trion field, with the remaining 40% held by Mexico’s state-run oil firm, Pemex. Pemex brought Woodside onto the project five years after discovery because it lacked the resources to develop Trion on its own.
Woodside expects a 16% return on the project with a short payback of four years, assuming $70 oil. The reserves that the project will tap have been estimated at 479 million barrels of oil equivalent in oil and gas
Of these, Woodside’s share is seen at 287 million barrels of oil equivalent. According to Pemex estimates, the gross recoverable reserves of Trion are 485 million barrels of oil equivalent.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com