
Talos expects final investment decision on Mexico's Zama in 2023
Despite earlier reports that it is struggling to reach a development deal with Mexico’s national oil and gas giant Pemex for the promising Zama field, US-based E&P firm Talos Energy expects a final investment decision on the project to come after the first quarter of 2023.
In its latest quarterly report, the company said it was "actively working" with Pemex and its two private partners, Premier Oil (owned by Harbour Energy) and Sierra Oil (owned by Germany's Wintershall) on the area's development plan, which it still expects to present by March 2023 at the latest.
Once the development plan is approved by hydrocarbons commission CNH, "the parties will then move toward FID [final investment decision] later in 2023," Talos said.
Since the field's operatorship was handed over to Pemex by energy ministry Sener earlier this year, the two companies have been negotiating the terms for joint development. A crucial point of disagreement has been what say Talos and its partners will have regarding the details of the field's development as it is rolled out.
"The parties are discussing the formation of an integrated project team, which would include representatives of each company and would report to the unit operating committee, to manage the field's development," Talos said in its report.
Both Pemex and the Mexican government have said in recent weeks that Talos was having doubts about the agreement proposed by the NOC. President Andrés Manuel López Obrador said on July 20 that the Houston-based firm was still attempting to become the field's operator, despite Sener's ruling. And Pemex CEO Gustavo Romero Oropeza told Reuters last week that Talos was "still a bit reluctant" to agree to its terms.
He added Pemex would be willing to invest "whatever it takes" to develop the project, the largest private discovery since Mexico's E&P sector was opened up to private sector participation.
According to Pemex, its draft development plan for Zama expects the field's oil output to reach 180,000b/d at its peak, roughly 11% of Mexico's current production and 20,000b/d more than estimated under previous plans. First oil is expected for the first half of 2024.
The field is estimated to contain some 700Mb of oil and was discovered by the Talos-led consortium in 2017. In 2019, the area was found by Pemex to overlap with a concession operated by the NOC, leading to a protracted discussion about who would become its operator, which was settled by Sener in July 2021.
At the time, Talos' assessment was that Sener had not followed international best practices when making the call, and the company started an international arbitration process to overturn the decision. By May, reports stated Talos had dropped the claim after a series of negotiations with Mexican authorities, including meetings with López Obrador.
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