Total Abandons Deepwater Oil Blocks

France-based TotalEnergies has abandoned a deep-water block in the Gulf of Mexico after it deemed the project to be commercially unviable. Due to COVID-19 delays, the National Hydrocarbons Commission (CNH) has issued the resolution of Total’s renunciation of the contractual area.

In 2016 Total Energies along with ExxonMobil won a license contract for exploration and extraction of hydrocarbons in the deep waters of the Gulf of Mexico. In October of 2017 the CNH approved the exploration plan for Total E&P which contemplated the perforation of two exploratory pits. It concerns block 2 of the fourth bidding located in the deep waters of the Gulf of Mexico in front of the shores of Tamaulipas with a 2 thousand 976 km2 surface.

Exxon and Total acted as main contractors and explored their respective pits, nevertheless, due to unsatisfactory exploration results, did not consider it to be of their commercial interest and presented their resignation to the area. On February 2020, Total notified its irrevocable resignation and quit the license contract. They proceeded to abandon the exploratory pit it perforated. In March 2020 Exxon and Total paid US$21.2 million to the Mexican Oil Fund in reparation fees for completing less than 79 percent of its corresponding duties.

“All of this is part of the risk. It is an uncertain business, but I will like to point out the positive, which is that the pit was perforated and information was obtained. We finally have certain knowledge about the subsoil that can serve as correlation with other pits in the region,” said Alma América Porres, CNH commissioner.

In addition, Porres explained that an investment of approximately US$100 million and MX$186 million was allocated to perforation studies that can be now useful for Mexican oil entities.  

Total has 8,214 employees in Mexico and approximately 200 service stations in the country. The firm still holds interests in several exploration blocks in Mexico, with operating rights. In the Salina basin Total won a share of 33.3 percent along with Statoil (33.4 percent) and BP (33.3 percent); in B15 it acts as operator and holds 60 percent of participating interest. And Blocks B32, B33 (50 percent) and B34 (42.5 percent) in shallow water. They are conducting various studies with the state-owned oil and gas company as part of a general technical cooperation agreement, according to the company’s website.