(Chron.com, 7.Jan.2020) — Talos Energy touted promising new study results in Mexico’s first big deepwater oil discovery, and the Houston producer is pushing to move forward so it can maintain control of the project.
Talos’ hold on the potentially prolific Zama discovery is somewhat tenuous because Mexico’s state energy company Pemex holds a neighboring exploration block, and Pemex also is interested in taking over operational control of Zama while letting Talos passively hold its ownership stake.
Talos contends that it has the critically important deepwater experience – on the U.S. side of the Gulf of Mexico – and that any changes would dramatically disrupt and delay the development.
“We believe it is in everyone’s best interests to maintain the urgency in bringing this project forward, and ensuring 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.
The Houston firm made the first major deepwater discovery offshore of Mexico after the country ended its 75-year-old oil monopoly and opened the country up to foreign oil and gas investments. But, now, Talos finds itself in the middle of geopolitical tensions as Pemex aims to flex its muscles again under Mexican President Andres Manuel Lopez Obrador, known as AMLO. The president, who took office in 2018, has flirted with undoing some of Mexico’s energy reforms that opened the country up to private investments.
On Tuesday, Talos said the Texas-based reservoir consulting firm, Netherland Sewell, completed a new study projecting the oil reserves of the Zama discovery – and likely the neighboring Pemex block – on the high end of the initial oil reserves estimates.
Talos has completed the early engineering work and wants to move forward with a final investment decision by the end of 2020. The plan is to build two fixed production platforms that would produce a combined 150,000 barrels of oil a day. Talos wants to complete construction and commence oil production in 2023.
But Talos must soon complete its negotiations with Pemex and the Mexican government and maintain control in order to meet those targets, Duncan said.
“The Zama project alone could generate approximately $28 billion of fiscal revenue to Mexico’s government – in addition to Pemex’s share of Zama – and will drive a significant amount of local job creation and positive social impact across the supply chain of this project,” Duncan added.
Talos owns a controlling 35 percent ownership stake in the project. One of Talos’ partners, London-based Premier Oil, plans to sell its 25 percent stake in the Zama project. The other partner, Sierra Oil & Gas, was absorbed at the end of last year by Germany’s Wintershall DEA.
By Jordan Blum