The unitization process of the infamous Zama field, discovered in Mexico, entered into its next phase, as established by Mexican regulation; Talos Energy Inc., announced this Friday.
Firstly, the Mexican Ministry of Energy (SENER) will now have to propose finalized terms of a Unitization and Unit Operating Agreement (UUOA).
Secondly, Mexican state-owned company, Petroleos Mexicanos (Pemex) and the Block 7 consortium, comprised of Talos Energy and partners Premier Oil and Wintershall Dea, missed the SENER deadline to propose a UUOA within the time frame; it ended in March 25.
Thirdly, constitution of a formal unit is required prior to the final investment decision (FID) and subsequent field development. This unitization process has been ongoing for at least a year. However, changing policies in Mexico, and the potential takeover from Pemex of the field have set back its development.
In fact, Talos Energy made the discovery of the field, back in July 2017; it was the first exploration well to be drilled by a private company in Mexico; after the energy reform of 2016. By September 2018, Mexico’s National Hydrocarbons Commission approved a $325m budget for appraisal drilling at Zama.
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Increased momentum for Zama unitization
However, “since the presentation of the original key terms for the UUOA, significant progress in reaching a common understanding has been largely achieved.” Said Talos Energy’s CEO, Timothy S. Duncan.
He also remarked. “We appreciate the increased momentum and commitment from Pemex towards achieving a joint resolution. As we transition into this new phase in the process, we also look forward to continuing to engage constructively; with both SENER and Pemex and we are confident we can achieve a positive outcome for all parties.”
On the other hand, as we reported previously, the unitization process has been hard for the companies involved in the project. Back in 2019, Premier Oil, which also has a 25% stake in Zama, tried to sell its interest.
However, Harbour Energy, an energy investment vehicle formed by EIG Global Energy Partners, announced it would likely keep its interest in Zama; through a new company created by Chrysaor Holdings Ltd and Premier Oil Plc.
Finally, as for April 1, the new Premier Oil would start trading under its new name Harbour Energy Plc. Therefore, the new company will continue developing the Zama field, Premier Chief Financial Officer Richard Rose said.