Mexican authorities have decided that Mexico's national oil company Pemex will become the operator of the giant Zama offshore field development, despite the fact that the discovery was made by the U.S. oil company Talos Energy back in 2017.
Talos Energy said Monday it had received the final Unitization Resolution ("UR") from Mexico's Ministry of Energy ("SENER") regarding the development of the Zama field in offshore Mexico, which among other things, affirms the appointment of Pemex as operator of the unit.
Following the realization that the Zama field spreads across both the Talos-operated Block 7 and an adjacent Pemex-operated block, unitization of the field was necessary under Mexican law, allowing for joint development of the entire reservoir instead of each company developing its own block.
Under the decision, Talos will maintain a 17.35% participating interest in the Zama field, and the company said it expected submission of a Unit Development Plan for approval by the working interest partners within 6-12 months, "a critical step before the parties can make a Final Investment Decision ("FID") in 2023."
Talos, which has objected to a decision made earlier for Pemex to operate a field Talos found, said Monday it will participate in activities related to reaching FID, while also continuing to evaluate various strategic and legal options.
Talos, as operator and 35% partner in the Block 7 lease, discovered the Zama field in 2017 as the first private sector consortium to enter Mexico following the country's major energy reforms. Zama was subsequently named the 2017 Global Discovery of the Year by Wood Mackenzie, and the field was fully appraised by mid-2019.
An independent third-party reserves auditor estimated the discovered recoverable resource volumes to be between approximately 735 – 950 million barrels of oil equivalent, and Zama could produce over 160,000 barrels of oil equivalent per day once fully developed. Talos has invested approximately $104 million in Zama since 2015 and these past investments are subject to cost recovery under the Production Sharing Contract, the company said.
Talos President and Chief Executive Officer Timothy S. Duncan stated: "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. 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.
"However, we understand how important accelerated first oil from Zama is for the Mexican energy sector and all of the company's stakeholders and we will work with the urgency required to finalize the Unit Development Plan so FID can be reached."
Talos has previously said that the platforms required to be installed at Zama would be the deepest facilities ever installed in Mexico, at approximately 550 feet (170 meters) of water.