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Talos Energy has been ordered to come to some agreement with Mexico’s state-run oil giant, Pemex for the development of its massive Zama oil field made back in 2017.
The Zama discovery is so large—potentially 670 million recoverable barrels large--that it is the largest discovery in Mexico by a private company in decades.
The hitch for Talos, however, who won offshore Zama back in 2015, is that the oil in Zama perhaps bleeds into the neighboring block, operated by Pemex. At least that’s the narrative Pemex is telling.
Pemex and Talos, according to Reuters, now have 120 days to come up with a “unification agreement” in order to develop the Zama reservoir together “in a way that would maximize its value.”
Pemex and Talos both are claiming that the oil find lies mostly on its own block, although, according to Reuters, Pemex has not drilled any exploratory wells on its side yet, unlike Talos.
If they can’t come to an agreement, the energy ministry will decide which company will run operations of Zama.
That there are squabbles over Mexico’s most exciting offshore oil prospect in decades is not surprising. In fact, given Mexico’s flip flop on its overall oil strategy, the fight over its oil between the state-run and a private entity should have been viewed as a near certainty.
Wood Mackenzie has estimated that nearly two-thirds of the Zama discovery lies in Talos’ blocks.
Mexico has suffered falling oil production for more than a decade as its mature fields deplete. Still, the country has wrestled with how to keep its oil wealth to itself while attracting the interest of foreign oil companies to draw on their drilling expertise and their capital.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.