Pemex seeks to operate giant Zama discovery

Mexico's state-owned Pemex will seek operatorship of the giant Zama reservoir, discovered by independent operator Talos Energy.

"Pemex wants to operate the field, we believe that we have the majority of Zama on our side," Pemex chief executive Octavio Romero said this morning.

In 2017, Talos Energy announced a major discovery of up to 800mn bl of recoverable crude equivalent in its shallow-water block 7 with its Zama 1 well that neighbors Pemex acreage.

While Talos Energy carried out a full appraisal program last year, Pemex has yet to drill any wells in its acreage to either confirm a joint reservoir or delimit the extension of the reservoir, despite securing a well drilling permit over a year ago.

A third-party evaluation contracted by Talos last year showed that 60pc of the major Zama crude discovery lies within Talos Energy's block, with the remainder on Pemex's acreage.

The independent evaluation pegs gross recoverable resources at 670mn-1.01bn barrels of oil equivalent (boe).

Talos Energy's chief executive Tim Duncan said last November that they hoped to operate the field given they had "spent all the money to date, we have taken all of the risk."

The company did not respond to a request for comment this morning.

Pemex was due to start drilling the Asab well in its Uchukil acreage on 28 February last year but, following delays installing the platform, Pemex now plans to start drilling by March. It is unclear whether Pemex now plans to drill the Asab well at all — on 14 January, it secured a drilling permit for the Nikita exploration well in the same acreage.

Talos Energy notified the energy ministry of the joint reservoir and evaluation findings on 9 December and oil regulator CNH will now be required to confirm the findings.

The two companies have been working towards a unitization agreement for the past two years, the first of its kind since the 2014 energy reform opened the door to independent operators. Talos Energy expects a final agreement by the end of 2020. The process is being watched closely by industry given the size of the discovery and its implications for other independent operators that secured contracts in the upstream auctions.

The Zama discovery will contribute a significant portion of independent operator output that is expected to hit 280,000 b/d by 2024.

Talos Energy has already completed the preliminary steps of front-end engineering and design toward developing detailed engineering plans for Zama and expects to establish first oil in 2023. Romero said today that Pemex would be able to start producing oil in the field next year but did not provide details.

Talos Energy, Sierra Oil and Gas, and Premier Oil won development rights for the shallow water block 7 in the first round of tenders overseen by CNH.

President Andres Manuel Lopez Obrador has criticized companies that won contracts in the auction rounds, alleging a failure to meet pledged production and investment levels.

Mexican independent operators produced 47,848 b/d in December last year, 4pc short of their 50,000 b/d year-end target.

By Rebecca Conan