Houston-based Talos Energy completed its independent resource evaluation of a giant find of 670 million barrels which could boost Mexico’s dwindling oil production statistics—but it’s undecided who gets the best pick.
Talos President and Chief Executive Officer Timothy S. Duncan said in a press release, “It was important to have Netherland Sewell (or ‘NSAI,’ the commissioner of the resources’ evaluation) conclude their independent contingent resource report by year-end 2019, and we are happy to see that the results of their evaluation exceed our previously guided resource range. With this step completed, we will continue to advance the project engineering and design work while also finalizing unitization procedures. As we complete these activities in the coming months, we look forward to another year of progress for Zama in 2020.”
Mexico nationalized its oil production industry completely in 1938. However, since 2014, the market has been opening up to foreign investors who have been developing its rich natural resources and increasing its meager output numbers.
The oil field was discovered in 2017 in the Zama region, shallow waters in the Gulf of Mexico, and was the first oil discovery in Mexico by a U.S. company in nearly eighty years, The Wall Street Journal reported.
The Zama complex is divided into two blocks of crude oil reserves. Pemex, a state-run company, owns the right to one block, while a consortium of foreign drilling companies led by Houston-based Talos owns the right to the other. Both blocks will need to be jointly operated under one leading operator.
The Zama field could be in operation as soon as 2023, but all parties will have to come to an agreement on how the pie is going to be divided. Meanwhile, foreign investors accuse the Mexicans of stalling negotiations in an attempt to get the best deal. They also contend that the state-run company will not work as efficiently as a consortium of private investors would do.
“We believe it is in everyone’s best interests to maintain the urgency in bringing this project forward, and ensuring that it is done so in an efficient way that draws from international best practices is critical to achieve these objectives,” said Talos Chief Executive Tim Duncan, according to The Wall Street Journal.
“Zama is a world-class asset. Any company in the world would want to have it in their portfolio. At the end of the day, Pemex wanting to operate Zama is pure ego. A private operator would be way more efficient,” said Pablo Medina, vice president of Houston-based consulting firm Welligence Energy Analytics, the Journal reported.
Mexico’s Energy Ministry, however, expressed it wants Pemex to take the lead in exploiting the Zama field.