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The Zama discovery in the Gulf of Mexico. The Zama discovery in the Gulf of Mexico.

Will Pemex take control of US firm’s huge oil find in Gulf of Mexico?

Sources say Pemex has its eyes on the billion-barrel field found two years ago by Talos Energy

Pemex wants to take over a lucrative private company oil project in the Gulf of Mexico, according to a report by the news agency Reuters.

Two company executives with knowledge of discussions at the state oil company and two former federal energy officials told Reuters that Pemex has its eyes on an oil field where the United States oil firm Talos Energy found a reserve of almost a billion barrels two years ago.

Talos – which has a 35% stake in the field – was the first private company to find oil after the government of former president Enrique Peña Nieto opened up the sector to private and foreign companies after an almost 80-year state monopoly.

However, the new government has indefinitely suspended further auctions of oil blocks in favor of offering restrictive partnerships to private oilfield services firms that allow Pemex to have greater control.

Reuters’ sources said that taking over Talos’ shallow water field, named Zama after the Mayan word for dawn, would be a symbolic blow to the previous government’s energy reform. They also said that it could act as a further deterrent for investment from the world’s largest oil companies.

However, Pemex does have a potential claim to Zama because it holds the drilling rights for an adjacent field.

An unpublished draft report by the consultancy firm Wood Mackenzie seen by Reuters said that about a third of the reserve discovered by Talos likely extends into Pemex’s field although that hasn’t been confirmed because the state-run company hasn’t yet drilled there.

The two companies began talks last year about carrying out a joint project and agreed to discuss later how revenue would be divided and who would ultimately have operational control. The Secretariat of Energy would settle disputes and designate which company would take control if the talks break down.

Energy Secretary Rocío Nahle, who is also the chair of the Pemex board, hinted in August that control of the project could go to Pemex.

“We definitely have to talk to Pemex, to Talos — another company that’s there — to see who will be in charge of the operations, because Pemex has a big part of it,” she said.

If Pemex takes control, Talos would retain its stake but have to rely on Pemex to drill efficiently and profitably. There is no certainty that would occur considering that Pemex is the world’s most indebted oil company and has seen a decline in oil production for 15 consecutive years.

“If Pemex does end up operating it, that would not send a good signal to private investors,” the executive of a major oil company that has several projects in Mexico told Reuters.

In the latter years of Peña Nieto’s presidency, oil executives said that investing in oil projects in Mexico was as attractive as drilling off Brazil’s coast or in the shale fields of Texas.

But with President López Obrador determined to wrest back at least some of the control ceded to private companies, Mexico is not nearly as attractive as it was.

George Baker, a Houston-based energy analyst and publisher of the newsletter Mexico Energy Intelligence, said “the door is closed on newcomers in Mexico right now while it’s wide open in places like Brazil and Guyana.”

Some firms that entered the market during Peña Nieto’s presidency have now decided to get out. One such company is Sierra Oil & Gas, which sold its 40% stake in Zama and all of its other Mexico assets to Wintershall DEA. Premier Oil said last month that its 25% stake in Zama was for sale although it plans to continue with three other energy projects in Mexico.

Talos CEO Tim Duncan declined to comment directly on a Pemex takeover of Zama but asserted that his company was the best qualified to manage the project.

“We’re fully prepared to go execute this project, finish it, wrap it up and get it into production,” he said.

Even though the federal government would get almost 70% of net profits from Zama under the terms of Talos’ contract, one of Reuters’ industry sources said that Pemex is resolute in its desire to seize control, claiming “for them, there is no other scenario.”

Source: Reuters (en) 

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