Oil: two major discoveries off Mexico
Anne Feitz 13/07/2017 Les Echos
Mexican oil reform is starting to pay off.
Two offshore discoveries of at least 1 billion barrels each were announced on Wednesday.
Less than three years after its major energy reform, the Mexican government can rejoice. On Wednesday, one after the other, two major oil discoveries were announced in the country.
A consortium of companies led by the American Talos Energy (with the Mexican Sierra Oil & Gas, and the British Premier Oil) announced that its Zama exploration wells, in Block 7, had resulted in the discovery of "au minus 1 billion barrels of oil in place, "according to Premier Oil, and even" from 1,4 to 2 billion, "according to Sierra. The same day, the Italian ENI indicated that the drilling of a third exploration well on the Amoca deposit, in the bay of Campeche (south of the country) allowed it to estimate the resources in place at 1 billion barrels of oil, and up to 1,3 billion in a larger area.
Opening to foreigners
"These two significant discoveries, both made in shallow waters, allow us to be optimistic about the continuation of operations in Mexico. You could say that this is the beginning of the exploration of a new area, comments Francis Perrin, research director at Iris. In addition, these announcements will allow Mexico to reap the first dividends from its reform. In September 2014, Mexican President Enrique Peña Nieto passed a historic law allowing private companies to operate in the country in the energy sector. A real revolution, difficult to gain acceptance, when the national oil company Pemex (Petroleos Mexicanos) held the monopoly of oil and gas in Mexico since the nationalization of the sector in 1938. The country wanted in particular to attract foreign companies, which have the technologies and (huge) financial means necessary to develop the country's resources.
"The discovery of Zama, the first made by a private company in Mexico in eighty years (Amoca had been discovered in 2003 by Pemex, but not developed), is the most important success to date of the reform of the Mexican energy, "says Pablo Medina of Wood Mackenzie. The government had started to allocate blocks (including Zama and Amoca) to private companies in 2015. Since then, it has launched four other auction rounds, which have already enabled it to sign 39 contracts representing, according to it, 49 billion investment dollars (43 billion euros). Total has won several, as operator or consortium. But also ExxonMobil, Shell, Chevron, CNOOC ...
Reverse the decline
"Given the abundance of known reserves in the Gulf of Mexico on the American side, it would have been surprising not to make discoveries on the Mexican side the day the country opened up," notes Francis Perrin. Wednesday's announcements will, however, help consolidate international companies in their choice of investment in Mexico, while they are more selective in times of low oil prices. And, hopes the government, to reverse the trend of declining oil production in the country, which fell to 2 million barrels per day, compared to 3,7 million in 2005. ENI hopes to start production on Amoca in early 2019.
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