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PEMEX Increases Reserves as SENER Signals Zama Unification

By Peter Appleby | Thu, 07/09/2020 - 17:23

Last year, PEMEX managed to increase its reserves for the first time in 10 years, achieving a desperately needed reversal in decline and offering signals that the NOC is moving in the right direction.

According to El Economista, the company raised its reserves by 2.4 percent or 171.7MMboe over the previous year’s figures. As of January 1, 2020, PEMEX’s proven reserves rose to 7.182 billion boe. This turnaround provides positive signs for PEMEX and the current administration, which has bet on revitalizing the former oil giant. Prior to the COVID-19 price crash, President Andrés Manuel López Obrador consistently called PEMEX the “lever” by which Mexico can be developed. His plan includes a minimum investment of US$8 billion into the Dos Bocas refinery.

The reserve rise may also help ease the doubts of creditors that have repeatedly brought up the company’s falling reserves and its apparent financial inability to restock those reserves as a reason to downgrade its rating. The 2.4 percent increase also marks the first steps along PEMEX’s aim to increase proven reserves by 22 percent during the López Obrador administration.

Last year, PEMEX Director Octavio Romero stated that 2019 would mark the year that the company began to incorporate more reserves than it removed from the ground. “We had been taking more reserves year after year, extracting more than the amount we incorporated,” he said. “This 2019, for the first time in the last 15 years, we are going to have an increase in 2P and 1P reserves.”

The director predicted a jump in proven reserves by the end of the sexenio: “The idea is that year after year it will increase so that by the end of this administration, 1P reserves will be in the order of 8.8 billion boe.”

PEMEX’s proven reserves look set for another bump following the Ministry of Energy’s order that the Zama reservoir, discovered by US company Talos Energy in 2017, is to be unified. One of the largest offshore discoveries in the world in recent years, the Zama reservoir extends over Talos-owned and PEMEX-owned blocks. The drawn-out process of unitization has now reached its end and the companies must work together to jointly develop the field, reports Reuters.

The companies will have to move quickly. According to details released by SENER and cited by Expansión, they will have only 120 days to come to an agreement on how best to move forward with Zama. With the experience that Talos Energy has in working in waters of 165m plus depth, it may be in PEMEX’s best interests to let the American company lead Zama’s development.

Last year, Talos Energy CEO Timothy Duncan told Mexico Business Publishing that the company’s platform in Zama “will be the deepest fixed platform in Mexico’s history, even though it is located in a shallow water area. We already operate three standalone facilities in water depths over 300m in the US Gulf of Mexico; these water depths are our specialty. Many of the technologies used at these depths were developed in the US Gulf of Mexico within the last 30 years and we have employed the majority of them on our platforms.”

The full interview can be found here.

Consultancy firm Netherland, Sewell & Associates concluded an independent evaluation of the Zama reservoir at the beginning of this year and published a “Higher Estimate” of 1 billion boe and a “Best Estimate” of 670MMboe, 60 percent of which resided in Talos Energy’s Block 7.

Photo by:   wasi1370, Pixabay
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Peter Appleby Peter Appleby Journalist and Industry Analyst