SENER Extends Deadline for Talos-PEMEX Unification AgreementBy Paloma Duran | Tue, 12/29/2020 - 11:13
SENER said PEMEX and Talos Energy (Talos) will continue negotiating the future of Zama’s massive shared crude deposit until March 25. During this time, it will be decided which company will operate the lucrative project, as well as the preliminary split of the reservoir, among other details.
The Zama reservoir was discovered by US company Talos in the Gulf of Mexico in 2017 and is estimated to have 700MMboe. This reservoir is considered one of the largest offshore discoveries in the world and extends over Talos Energy-owned and PEMEX-owned blocks, reported Reuters.
PEMEX said more than half of Zama is in its block but only Talos has drilled several wells to confirm the contours of the reservoir. According to an engineering study from the technical oil consultancy firm Netherland, Sewell & Associates, Talos’ block has 60 percent of the reservoir, meanwhile PEMEX has 40 percent, reported Reuters.
Moreover, the consultancy firm concluded an evaluation of the reservoir that shows a “Higher Estimate” of 1Bboe and a “Best Estimate” of 670MMboe, 60 percent of which is in Talos’ Block 7, reported Reuters.
According to El Financiero, this will be the first time a deposit will be developed between PEMEX and a private company under a unification procedure. Loren Long, Vice President–Mexico at Talos, said to MBN that the main concern is that unitization is a new concept for Mexico and PEMEX. Long said that due to the learning curve, Talos must be patient if it wants to have successful results.
The instruction of reaching an agreement in 120 days was given on July 7 and would have expired this week. However, last week SENER approved a 60-day extension to the negotiations over the future of Zama reservoir, which must benefit both companies and the Mexican government, reported Reuters.
Timothy Duncan, CEO of Talos, said to Reuters that the extension represents the clearest and fastest route to reach first oil. “It is critical to deliver production as fast as possible. Everyone benefits from production coming onstream – the Mexican state benefits, PEMEX benefits and Talos and its partners benefit,” said Long.
At Mexico Oil & Gas Summit 2020, Duncan said that to have the field unitized, there must be a partnership between the four companies involved – Talos, Premier Oil, Wintershall DEA and PEMEX –, which will allow for better progress. However, there are many challenges to overcome before production begins in Block 7, such as reaching an agreement and PEMEX’s experience in this type of project.