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Breaking News:

OPEC Lifts Production in February

PEMEX Approved To Explore New Deepwater Block

PEMEX received regulatory approval to explore a new deepwater block on Tuesday, but with the condition that the state-owned oil giant seek a private partner that would eventually operate the new allotment, according to a new report by Reuters.

Government estimates say the new block, named the Chachiquin area, could pump 80,000 barrels per day at its peak. It’s located next to PEMEX’s Nobilis-Maximino block, for which the company is also looking for a development partner.

Development at Chachiquin, which is slated to be Mexico’s third deepwater joint venture, will not begin until 2024, PEMEX says.

"It's incredibly important for the country to move forward with deep water projects," said Hector Moriera of the National Hydrocarbon Commission. Roughly half of Mexico's prospective oil resources are offshore. "That's where much our country's oil future lies,” the commissioner added.

Five wells drilled in the Nobilis-Maximino block show up to 500 million barrels of reserves. PEMEX chairmen approved an auction to find a suitable partner to develop the field last month. They hope to finalize a deal with a foreign company by the end of 2017.

Joint ventures with private multinationals are new for Mexico. The entrance of foreign players in the oil-rich country comes after a wave of economic liberalization policies spearheaded by President Enrique Nieto in 2013. The goal of the initiative was to reverse the decline in the nation’s oil production and encourage green energy initiatives by ending the monopoly of Petróleos Mexicanos, or PEMEX, in the fossil fuel sector and opening up opportunities for foreign direct investment.

The reform also included a liberalization of fuel prices, which sparked widespread protests among the population earlier this year and brought the President’s popularity ratings to record lows.

By Zainab Calcuttawala for Oilprice.com

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