Pemex responsible for Zama’s uncertainty in FID by delaying drilling operations at its portion of the field

Following the news that Pemex has rejected Talos’ claim to the Zama field, Adrian Lara, Oil and Gas Analyst at GlobalData, a leading data and analytics company, offers his view:

“There are no indications on when Pemex will start drilling its adjacent block to also assess the discovery and without this appraisal the unitization negotiation cannot formally begin. Without an agreement between Pemex and Talos Energy on the unitization and operatorship of Zama, the project’s first production date will be delayed and the field will not contribute towards reversing Mexico’s domestic oil decline. In addition the Mexican Government has now hinted its interest in having operatorship of the field.

“Talos has actually moved quite fast in every step, from exploration to appraisal. This is contrary to critiques of the current Mexican administration with respect to new operators not investing enough in awarded areas.

“More importantly this situation will be a benchmark on the manner in which Pemex can lead future negotiations in joint developments and to how the government values the role of international operators.

“During 2019 Pemex has been focusing on 22 priority fields but only two of these have started development. The fields with approved development plans are already behind on awarding contracts to begin drilling and will most certainly suffer delays in their start date as a result. Moreover, their aggregated peak will be later than expected and less than the indicated 700,000 barrels per day (bd) of oil.

“Given the current objective for the Mexican Government in rapidly reverting Mexico’s oil production decline, Zama should in principle be a priority field for development.”

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