CNH Approves Uchukil Exploration; Repsol Abandons Various Blocks

CNH approved Repsol’s request to abandon three out of the six blocks the Spanish energy multinational holds in Mexico. The regulator simultaneously approved PEMEX’s exploration plans at the Uchukil assignment.

The regulator approved Repsol’s early termination by waiving three out of Repsol’s six blocks in Mexico. One of the fields Repsol decided to abandon is located to the east of southern Tamaulipas. Until September 2022, the company had invested US$64.8 million there.

“It is a business decision for Repsol, there is only one area with great discoveries, and it will focus on it. There may be interesting potential in the other areas, but the company will abandon them to focus on the development of what has been obtained. Both areas return to the state and are at the disposal of the government to decide how to take advantage of them in the future,” said Alma América Porres Luna, Commissioner, CNH.

CNH also enabled PEMEX to modify its exploration plan and carry out further exploration work in a shallow-water block off the coast of Tabasco. The Uchukil assignation, AE-0151-M–Uchukil, has a size of 1,107.6km². According to Rodrigo Hernández Ordóñez, Director General, CNH Exploration Opinions, PEMEX’s objective is to incorporate hydrocarbon resources in areas with greater opportunity in the Tertiary and Mesozoic plays. The NOC proposes to carry out five exploratory studies, as well as the drilling of the Sukuum-1EXP and Yolpachi-1EXP exploratory wells. PEMEX expects to retrieve of 273MMb of crude oil, with an estimated investment between US$108.94 million and US$261.05 million.

Uchukil represents part of the first unification process of a Mexican oil field. In 2017, E&P company Talos Energy became the first private player to strike oil in Mexico for over seven decades, discovering one of the 10 largest finds in Mexico’s history, and considered one of the most promising shallow water fields in the world today: the Zama field in the Southeast Basin, 60km off the coast of Tabasco. It was later discovered that the reservoir extended into the adjacent Uchukil block, operated by PEMEX. The NOC and Talos, which wanted to become Zama’s operator, failed to reach an agreement, and the energy ministry intervened by appointing the NOC as the sole operator in July 2021. 

Many analysts interpreted SENER’s polemic decision as harmful to Mexico’s legal certainty and potential to bring in private investment. The development of the Zama field was stalled due to disagreements between the two oil companies. Nevertheless, following intervention by President López Obrador, progress appears to have been made in talks concerning Zama. A few days ago, Talos announced that the Joint Development Plan of the Zama Field will be presented to CNH by March 2023, including the terms for the development of both companies.