Mexico hands over control of private oil discovery to state-owned Pemex

The Mexican government granted control of one of the country’s largest oil companies Oil discovery After months of deliberation, the state-owned Pemex was reviewed, which dealt a blow to private investment and increased the possibility of international litigation.

A consortium consisting of Talos Energy of the United States, Premier Oil of the United Kingdom and Wintershall DEA of Germany discovered nearly 700 million barrels of the Zama oil field in 2017 and has invested 325 million US dollars in the project so far.

But some of these projects spread to the land owned by Pemex, which sparked a struggle about who should be held accountable. The Department of Energy has now ruled to support state-owned companies, and President Andrés Manuel López Obrador regards them as a national champion.

inside letter Energy consultant Gonzalo Monroy posted on Twitter that Energy Minister Rocío Nahle named the discovery Pemex Operator and said that the two companies should propose development plans within 30 days.

Neither the government nor Pemex responded immediately to the announcement on Monday.The news was released a few days after a Pemex pipeline in the Gulf of Mexico caught fire and triggered Burning in the sea.

Former Deputy Hydrocarbons Minister Lourdes Melga stated that Pemex did not want this sector when the industry opened up to private investment under Mexico’s 2013 energy reform. “This is a scandal,” she said. “This is not entirely expropriation, but it is close.”

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

She quoted Pemex CEO Octavio Romero as saying that the company “has sufficient financial capabilities.” Pemex reported a loss of nearly US$2 billion in the first quarter.

Pemex said it owns 50.43% of the oil field, located 60 kilometers off the coast of the Gulf of Mexico in Tabasco, and the consortium claims to own 60% of the shares.

However, the consortium stated that such percentages usually change with drilling. Pemex has not yet drilled any wells on its land, and the consortium has drilled 1 exploratory well and 3 evaluation wells.

Emily Medina, a researcher at the Energy Policy Research Foundation, said: “In terms of how the current government views private sector investment in Mexico’s energy industry, this is a direct signal to the market.” “The government seems to be a direct signal to the market. It must be more Pemex than Talos.”

“Given their operations and business conditions, we cannot let them take the helm,” said a senior official of the consortium who was not authorized to be named. He said that a lawsuit may be filed under the USMCA Free Trade Treaty.

Given the depth and geological conditions of the oil field, as well as safety issues, including the lack of measures to prevent the well from collapsing, the official mentioned concerns about Pemex’s financial and technical expertise.

The oil is located at a depth of 250m. According to Monroy, Pemex “never operated anything deeper than 150m.”

Since taking office in 2018, López Obrador has stopped oil auctions and joint ventures with the private sector. On Monday, he cited Nahle, a passionate energy nationalist, as one of the potential successors to the end of the presidency in 2024.

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