Mexico’s Deepwater Explorations Remain Promising

Mexico has vast oil reserves that remained unexplored for years. After the 2014 Energy Reform, unprecedented opportunities opened for international operators to embark on attractive deepwater exploration projects through the oil bids organized by the Mexican government. Seven years later, this exploration starts showing promising results, shared Malaysian IOC Petronas.

Founded in August 1974, the company has 48 years of experience, much of it in global operations. Petronas entered Mexico in 2015 on the back of the Energy Reform, as this regulatory change represented Petronas with the opportunity to position itself in a new market, contributing to its mission of embodying a progressive energy and energy solutions partner, enriching lives toward a sustainable future.

This incursion into the Mexican market occurred through the licensing rounds. "These rounds were a transparent and open process," explained María Lupi, Head of Business Planning & Petroleum Agreements Management, Petronas. This openness was something completely new for Mexico’s oil and gas industry, which was used to more closed processes, making Mexico a landmark for the future of the industry.

The oil rounds provided opportunities throughout Mexico for onshore, shallow- and deepwater plays, both conventional and unconventional. "This variety of opportunities provided an attractive platform for multiple companies to participate in the Mexican oil and gas market," said Lupi. For Petronas, it was extremely appealing to be able to enter the frontier area of offshore exploration that was opening for the first time in the country.

Petronas focuses on pursuing value-driven growth, and Mexico brings high value to the table. The country is one of the largest producers and other liquids in the world. It is also the fourth-largest oil producer in the Americas, just behind the US, Canada and Brazil. Entering Mexico allowed Petronas to consolidate a strategic portfolio in line with the company’s strategic plans for the future.

Petronas' exploration opportunities materialized in 10 diversified blocks throughout the Gulf of Mexico. The company has a presence in the Perdido Area, the Mexican Cordillera and the Salina Basin. Of these 10 blocks, Petronas operates five together with eight partners.

Here, Petronas has drilled 10 wells and spudded nine exploration wells as well as one appraisal well. The company committed to nine wells within its portfolio of which it has already drilled seven. "Apart from that, we have drilled two wells that were not in our commitments at the time we entered the exploration rounds," Lupi explained. By the start of 2023, Petronas is scheduled to drill another well in Block 4.

Petronas is the second largest company in Mexico in terms of contract acreage, with more than 22,099 km2. Of the company's 80 employees working in the territory, more than 50 percent of those hired are Mexican talent.

Petronas' exploration history in Mexico began in February 2019 with the Cholula well, then continued in June with Yaxchilan East in the same year. Despite the pandemic, Petronas, together with its partners via consortia, managed to drill four wells. In February 2020 it started with Chinwol and Polok 1, then during the shutdown continued with Juum in May and Moyote in November. In 2021 Petronas maintained the drilling pace of the previous year, starting in January with Xakpun. It then continued the campaign during May with two wells, Polok 2 and Chak, and ended the year with the Bacalar well in September. This year, the company will start with the Tulum 1 well in October. In December, the company will drill its last well commitment in Block 26. Then, during 1Q23, it will drill a new well in Block 4.

Measuring exploration success is complex. Petronas measures the efficiency of its performance in this area through the safety of its workers. "For Petronas, safety comes first, we measure our exploration success by making sure all our personnel can go back home safe and sound," said Lupi.

In addition to meeting the agreed targets, Petronas maintains plans to operate in Mexico beyond 2022. "The company has a vision of staying in Mexico for the long term," Lupi said. The strategy includes continuing exploration efforts with the drilling of high-impact wells that will allow the company to have basin mastery for its long-term targets.

The second part of the strategy is to monetize existing discoveries that the company already has in its portfolio along with future discoveries. Finally, with the third pillar of the strategy, the oil company aims to continue its value-based growth. Petronas wants Mexico's energy ecosystem and support the entire supply chain, as it continues to strengthen its relationship with its partners, regulators, authorities and communities.

"Petronas is always open to opportunities that may present themselves in the future and to continue our history in Mexico for many years to come," Lupi concluded.