Zama Talks Extended; PEMEX Faces Retail Losses

As the curtains close on an unprecedented year for the oil and gas industry, discussions on the unification of the Zama reservoir remain ongoing. Oil prices were pushed up and left to deflate again as the US stimulus package was debated and PEMEX is feeling the heat of competition in the retail sector.

All this and more in the Week in Oil and Gas.

Zama Unification Deadline Extended

Talks between PEMEX and US IOC Talos Energy over the unification of the Zama reservoir have been given an extension by SENER, as the two operators seek an agreement on how the reservoir’s riches will be split and who will operate the field. The original deadline would have expired this week but SENER approved a 60-day extension for the companies to discuss further. The unification would be the first ever agreed in Mexico.

This has been a contentious issue with PEMEX previously stating that it has the larger share of the almost 700MMboe that are expected to reside in the reservoir despite not having drilled any exploratory wells. Meanwhile, Talos CEO Tim Duncan told MBN in September that Netherland, Sewell & Associates’ independent report “effectively drew a line stating that of the 670MMboe “Best Estimate” volume, 60 percent of that resides within Block 7 (owned by Talos).”

PEMEX Loses 30 Percent of Gas Stations in Five Years

Though PEMEX remains by far the largest player in the retail sector, its power appears to be dwindling as figures show it has lost 30.86 percent of its retail sites in the last five year.

The Energy Reform that gave private business the opportunity to open and operate privately branded stations has increased competition. PEMEX’s stations now represent 7,750 of the approximately 12,700 stations in Mexico, down from 11,210 stations in 2015. OXXO Gas, with 483 stations in the Republic as of March 2019 comes next, with BP following closely behind.

The draft resolution bill presented by SENER this month that would change the permitting regulations for the import of gas is likely to have a detrimental impact on competition in the sector, COFECE has warned.

Oil Prices Rose on US Stimulus Progress

Global oil prices rose on Tuesday after the House of Representatives passed an increase to the US stimulus bill, which was accompanied by falling crude inventories. Prices fell again as Senator Mitch McConnell blocked the bill in the Senate.

WTI sat at US$47.96 per barrel at 12:34pm CST on Tuesday, an increase of 0.73 percent on Monday’s close, though earlier in the day it had risen to US$48.31 per barrel. Brent crude also saw gains of 0.53 percent by the same time, rising to US$51.14 per barrel after reaching US$51.60 earlier in the day.

Later on Tuesday, however, Republican Senator Mitch McConnell blocked the attempt to increase the stimulus package for most Americans from US$600 to US$2,000 and prices fell slightly on Wednesday.