(Reuters) – Petroleos Mexicanos (Pemex) is ready to invest billions of dollars in a disputed major Gulf of Mexico oil field once its U.S. partner Talos Energy accepts Pemex will run the project, the chief executive of the Mexican state oil company said.
The 850-million-barrel Zama field has become a bone of contention under President Andres Manuel Lopez Obrador’s efforts to strengthen state control of energy.
Majority stakeholder Pemex has had a lengthy standoff with Talos, which leads a private consortium that also includes Harbor Energy (HBR.L) and Wintershall Dea (INT.UL), over who should operate it. It has reached the point where the Mexican and U.S. governments have had to mediate.
“They (Talos) are still a bit reluctant. We hope they’ll finally accept, and that we can get the project started,” Pemex Chief Executive Octavio Romero told Reuters in an interview at a boardroom at the company’s Mexico City headquarters.
He said the other two companies in the consortium agreed with Pemex on the need to proceed. Pemex must operate the project because of its experience, its greater size and because its section of the block holds most of the reserves, he added.
“The only company that still doesn’t want to accept that they cannot be operators because they have neither the size nor the percentage is them. It’s Talos,” he said.
Talos has a 17.35% stake in Zama after the project’s unitization. It wants to be in charge of how to develop the reservoir, which is regarded as one of the top prospects in shallow waters worldwide.
Talos (TALO.N) in September filed notices of dispute under the United States-Mexico-Canada (USMCA) trade agreement, a prelude to seeking international arbitration. Reuters reported in May that Talos had paused the action during high-level talks. read more
Talos won the right to develop the lucrative field in a tender auction held under the last government. It has been at loggerheads with Mexico since the Lopez Obrador administration decided to make Pemex the operator of the field in July 2021.
Lopez Obrador froze the oil and gas auctions, and his drive to favor Pemex and the national power utility culminated last week in the United States requesting dispute settlement talks with Mexico over its energy policy under USMCA. read more
Pemex has not publicly disclosed its stake in Zama, but according to an independent analysis of the reservoir, 50.43% of Zama’s reserves are on Pemex’s side.
Talos had no immediate comment and Wintershall did not reply to a request for comment. Harbour declined to comment.
‘WHATEVER IT TAKES’
Asked whether Pemex has the means to develop Zama, Romero firmly assented and pledged to invest “whatever it takes.”
The state oil firm has financial debts of $108.1 billion and $13.7 billion with suppliers, alongside other commitments that have persistently saddled it with negative working capital.
“The president said that if Talos accepts, the Mexican government and Pemex will proceed,” Romero said of the investments Zama requires in the coming years, which will coincide with a hefty debt repayment schedule.
The Mexican presidency did not reply to a request for comment.
Investment in the field this year would be “very little” but would ultimately encompass “billions of dollars”, Romero said.
He explained that if final agreement was reached in 2022, investment for 2024 would be higher, and that Lopez Obrador had made a firm commitment on Zama during energy sector meetings held between Mexican and U.S. officials in May and June.
At the beginning of June, Lopez Obrador said Mexico and Talos were close to reaching a deal on developing the field.