Mexican national oil company Pemex and Hokchi Energy have begun the first stage of unitization negotiations over a possible offshore shared reservoir in the southern Gulf of Mexico, Mexico’s energy ministry told Reuters Sept. 2.

The ministry said Pemex, formally known as Petroleos Mexicanos, told it in May that an exploratory well it drilled in a block where it holds development rights “infers” the possibility of a shared oil reservoir with an adjacent shallow water area belonging to Hokchi Energy.

The companies have begun talks over a confidentiality agreement that will allow both sides to share technical data, the ministry said.

Hokchi is a unit of Argentina’s Pan American Energy, which is partially owned by British oil major BP.

None of the companies involved—Pemex, Hokchi Energy, Pan American Energy or BP—immediately responded to a request for comment.

The ministry’s announcement confirms local media accounts earlier on Sept. 2 that the two sides may have a shared reservoir, which would ultimately need to be confirmed in a technical analysis by Mexico’s National Hydrocarbons Commission, or CNH, the sector regulator.

If confirmed, it would mark the second such shared oil reservoir in Mexico, after the CNH determined earlier this year that the so-called Zama reservoir discovered by U.S.-based Talos Energy extends into Pemex's neighboring block.

Both Pemex and Talos claim a majority of the nearly 700 million barrel Zama discovery even though Pemex has yet to drill any wells in its adjacent block.

The energy ministry has given both sides until early next year to come to an initial agreement over a preliminary split of the reservoir and to decide which company operate of the potentially lucrative development.

Offshore