The Mexican government is close to reaching a deal with U.S.-based Talos Energy over the future of a potentially lucrative shared crude discovery, the president said on June 3.
The handling of Zama, a deposit holding some 900 million barrels and located offshore in the southern Gulf of Mexico, which provoked a battle over who would run the project, is being closely watched by U.S. investors as a test of President Andres Manuel Lopez Obrador’s commitment to respecting private contracts in the politically sensitive energy sector.
Talos and its private partners discovered Zama in 2017 in a block won at auction under Lopez Obrador’s predecessor. But the deposit extended into a neighboring block belonging to state-run Pemex, which kicked off a series of contentious negotiations over how to divide the oil and who would run the operations.
“It looks like an agreement is being reached. I myself told the company’s manager that their investments are guaranteed,” Lopez Obrador said at his regular morning news conference.
How much say the Talos-led consortium, which also includes Harbour Energy and Wintershall Dea, will have in the project’s technical development and future commercial considerations remains to be decided.
Last year, Mexico’s energy ministry selected Pemex as Zama’s operator over Talos, despite the company's insistence it was better suited technically and financially.
RELATED:
Talos Energy Officially Loses Zama Operatorship in Unitization Process
Talos said in a statement later on June 3 that it seeks a deal that “respects the rule of law” and can ensure Zama’s successful development, and expressed hope a mutually beneficial agreement can be reached.
Reuters reported last month that the U.S. oil company had temporarily suspended pursuit of an arbitration claim against Mexico over Zama.
Talos has argued that Mexico could be in breach of the United States-Mexico-Canada (USMCA) trade agreement and a separate investment treaty with the U.S. In September, it submitted USMCA dispute notices, a step toward an international arbitration claim.
Recommended Reading
Why Putin Brought a Gas Pipeline to a Knife Fight
2022-07-27 - Squeezing the European natural gas supply with winter approaching is a tactic in Russia’s war with Ukraine, but the global consequences could mean a resurgence of coal.
Russia Stops Gas Flows to Finland Over Payments Dispute
2022-05-23 - The move by Gazprom comes at the same time as Finland is applying to join the NATO military alliance, a decision spurred by Russia's invasion of Ukraine.
Russia Widens Europe Gas Cuts as Gazprom Halts Dutch Trader’s Supply
2022-05-31 - Moscow had already stopped natural gas supplies to Bulgaria, Poland and Finland citing their refusal to pay in Russian rubles, a demand made in response to Western sanctions.
US Natgas Futures Gain on Strong LNG Exports, Texas Heat Wave
2022-05-17 - Traders noted U.S. natural gas prices were up despite a 7% drop in European prices and forecasts for milder weather and lower U.S. demand over the next two weeks than previously expected.
EU Unveils 210 Billion Euro Plan to Ditch Russian Fossil Fuels
2022-05-18 - Russia's invasion of Ukraine has prompted the European Union to rethink its energy policies amid sharpened concerns of supply shocks.