Mexico Says it Reached Agreement With 16 US Energy Companies

Companies from the US celebrated progress on talks regarding several energy projects involving the Mexican government and the US private sector. Minister of Foreign Affairs Marcelo Ebrard, Minister of Energy Rocío Nahle, Minister of the Interior Adán Augusto López and Ken Salazar, US Ambassador to Mexico, organized the talks that aimed to resolve disputes that materialized because of President López Obrador’s shift in energy policy.

One of the most relevant issues addressed by López Obrador was the progress in the ongoing negotiations between PEMEX and Talos Energy regarding the Zama shallow-water project, which could produce as much as 160Mb/d once fully operational. Both companies are part of the unified oil project, but the state declared PEMEX as its operator, even though Talos made the discovery. Mexico justified its decision arguing the proximity of the oil field to a PEMEX-controlled block, a decision that Talos, as well as the international energy community received with discontent. A possible new agreement between PEMEX and Talos therefore comes as a relief, as Talos had already scaled the conflict to international arbitration.

The IOC asked to return the area surrounding Zama’s unified region, which CNH approved. The company must now deliver proof that it returns the area in the same condition that it received it as a result of Round 1.2’s bidding process. Regardless of this outcome, President López Obrador said that Talos Energy will continue working alongside PEMEX and invest in upstream activities, including exploration.

Other projects mentioned by the Mexican president include a natural gas liquefaction and export terminal in Puerto Libertad, Sonora. This project will be owned and operated by Mexico Pacific Limited (MPL). The project is planned to be developed on a 445ha site and it is expected to have a capacity of 12MTPA. The final investment amount is yet to be determined, according to the company’s website.

López Obrador also highlighted the efforts made to supply energy and gas to the Yucatan and Baja California peninsulas, which have been isolated from these resources because of lacking interconnection infrastructure. The president highlighted that energy demand is increasing along with the rise of tourism in these areas. As a solution to the energy shortage, a tender was recently launched by CFE for natural gas infrastructure in Baja California. López Obrador said that two combined cycle power plants were already tendered. Their first phase should be ready by the end of 2023.

“With these two plants and with the gas pipeline, which is being reinforced and is even going to be expanded, the problem in the peninsula is solved,” said the president, referring to how Engie’s Mayakan pipeline may resolve Yucatan’s energy predicament.