PEMEX Becomes Operator of Zama Field

This week, the Ministry of Energy (SENER) announced the final Unitization Resolution (UR) of the Zama offshore field and designated the state-owned oil company PEMEX as the operator of the shallow water area in the Gulf of Mexico, in lieu of the E&P player Talos Energy.

A verdict was required after it was determined that the Zama field spread across both the Talos-operated Block 7 and the contiguous PEMEX-operated block. After several months of waiting, and even though the former company is originally responsible for the discovery of the field in 2017, SENER decided that of the 35 percent participating interest it had before the verdict, Talos will only maintain 17.35 percent.

According to an independent assessment carried out by Netherland, Sewell and Associates, Inc. (NSAI), about 60 percent of the total resources of Zama are located within Block 7. However, shortly after PEMEX commissioned a third-party assessment by Texas consultancy Ryder Scott, which concluded that 50.43 percent of the reservoir was in the PEMEX-controlled block. The latter study also estimated recoverable resource volumes at 735MMboe and 950MMboe with production of 160Mboe/d once fully developed.

"We are very proud of our operational leadership in Mexico's private energy sector and of our accomplishments thus far with our world-class Zama discovery,” said Talos Chief Executive Timothy Duncan on a release, where the company also addressed the participating interest reduction: “We are disappointed that despite our consistent track record of success, safety and progress we were not provided the opportunity to retain our role as operator for the benefit of the project,” added Duncan.

However, PEMEX still needs to wait from six to 12 months until the submission of a Unit Development Plan and its approval by the working interest partners, so they can finally materialize a Final Investment Decision (FID) in 2023. Until then, Talos has said it will continue evaluating strategic and legal options regarding Zama.

In September 2021, when PEMEX was initially appointed as operator of Zama, Talos submitted notices of dispute to the federal government and accused PEMEX of engaging in what the company considered several violations of USMCA, reported MBN. Although it was widely considered one of the most important oil discoveries in the Mexican territory in over twenty years, works of extraction at Zama have not started. According to analysts sourced by MBN, the government’s nationalistic practices, “regulatory inexperience” and the “PEMEX-centric orientation of the current government in Mexico” have all been fundamental to the underdevelopment of the Zama field.

Nonetheless, Talos expressed optimism about the opportunities that Zama could bring to the energy industry. “We understand how important accelerated first oil from Zama is for the Mexican energy sector and the company's stakeholders and we will work with the urgency required to finalize the Unit Development Plan so FID can be reached," commented Duncan.