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Mexico gives control of private oil to Pemex

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The Mexican government has granted control to one of the largest in the country oil spills to Pemex of state ownership after months of deliberation, dealing a blow to private investment and raising the prospect of international litigation.

A consortium made up of Talos Energy of the United States, the UK’s Premier Oil Company and Germany’s Wintershall DEA have discovered the Zama field of nearly 700m barrels in 2017 and have invested $ 325 million in the project so far. today.

But some of the projects are spread over an area of ​​Pemex property, which has sparked a battle over who should be in charge. Now the Minister of Energy has ruled in favor of state society, which President Andrés Manuel López Obrador sees as national champion.

In the letter posted on Twitter by energy consultant Gonzalo Monroy, Energy Minister Rocío Nahle called Pemex operator of the discovery and said the companies should present a development plan in 30 days.

Neither the government nor Pemex had any immediate reaction to the news, which was released on Monday. The announcement came days after a Pemex pipeline in the Gulf of Mexico caught fire, causing a flash in the sea.

Lourdes Melgar, a former undersecretary for hydrocarbons, said Pemex did not want the field when the sector was opened to private investment under Mexico’s 2013 energy reform. “This is a scandal,” she said. said. “It’s not exactly an expropriation, but it’s close.”

Nahle said his decision was based on a study by the National Hydrocarbons Commission, which concluded that Pemex has “favorable technical and operational conditions and characteristics” to develop the field.

He quoted Pemex CEO Octavio Romero as saying the company had “sufficient financial capacity”. Pemex posted a first-quarter loss of nearly $ 2 billion.

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Pemex said it owns 50.43 percent of the field, located 60 km off the Gulf coast of Tabasco state, while the consortium claims to own 60 percent.

However, the consortium said such percentages typically change as wells are drilled. Pemex did not drill any wells on its surface while the consortium drilled one exploratory well and three assessment wells.

“This is a direct signal to the market in terms of how this government sees private sector investment in the Mexican energy industry,” said Emily Medina, a fellow at the Research Foundation for Energy Policy. “It looks like the government will definitely favor Pemex over Talos.”

“We cannot let them be at the helm, given the state of their operations and activities,” said a senior consortium official who was not authorized to be appointed. He said disputes under the USMCA free trade agreement were likely.

The official cited concerns about Pemex’s finances and technical capabilities given the depth of the field and geological conditions, as well as security concerns, including a lack of willingness to prevent the collapse of the wells.

Analysts say the Zama oil is located at a depth of about 168m. The deepest Pemex drilled to date is about 110m.

Since taking office in 2018, López Obrador has stopped the oil auction and joint ventures with the private sector. On Monday, he cited Nahle, an ardent energy nationalist, as one of a group of potential successors to the presidency when his term ends in 2024.




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