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Breaking News:

Fitch Expects $95 Oil In 2023

U.S. Driller May Get Lead Role In Major Mexican Oilfield

Mexico's Pemex is considering letting U.S.-based Talos Energy lead the development of the Zama oil field, Reuters reported, citing the state oil company's chief executive.

Talos Energy, leading a consortium of foreign oil companies, discovered the large Zama oil deposit in 2015. At an estimated 670 million recoverable oil barrels, the discovery was the largest oil find in Mexico by a private company in decades. Pemex, however, said that the Zama deposit extends to a neighboring block operated by the Mexican company.

Last year, the Mexican government ordered the U.S. company to reach an agreement with Pemex on how to jointly operate the Zama field after an independent evaluation revealed that 60 percent of the field's reserves lay in the block operated by Talos Energy. If the two failed to reach an agreement, the government would decide who would operate Zama.

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This was in mid-2020. By the end of that year, the two still hadn't come to an agreement. The Mexican energy ministry extended the deadline for the talks until the end of February of this year.

The Reuters report signals that the companies may be approaching an agreement even if it goes against the original plans for Pemex to operate the field.

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"It's not a case of 'I want (to be the operator) because I'm the biggest, or I'm the best-looking,' it's because it suits them and it suits us," Pemex chief executive Octavio Romero said in an interview with Reuters. "We're talking about it, we're analyzing it technically."

"It may be at some point the consortium meets all the criteria that matter to Pemex to develop this field; if all the conditions are acceptable and beneficial for Pemex, we could analyze it."

Mexico is struggling to reverse a steady decline in oil production, but this has proven challenging, especially after the Lopez Obrador government suspended all contracts with foreign companies signed by the previous administration for a thorough review.

By Charles Kennedy for Oilprice.com

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