Talos Energy Seeks Negotiation After Pemex Designation As Shared Field Operator

Talos Energy said on Friday it presented to the Mexican government “Dispute notifications” linked in part to the decision to designate Mexican state Pemex as the operator of a marine oil field that it shares with a consortium led by the American company.

At the beginning of July, the Energy secretary (Sener) has informed relevant parties of his decision to grant Pemex the operation of Zama, a shallow water field discovered by Talos in 2017 and considered the largest oil discovery by private companies in the country since decades.

The government of Mexican President Andrés Manuel López Obrador, which has promised to return the country’s oil wealth to the state, appointed Pemex as Zama’s operator and granted it a stake in the 50.4%. It was one of his most recent moves to reverse the historic reforms of the previous administration that opened up Mexico’s energy industry to private investment.

“Despite the current designation of PEMEX by SENER as operator of the Zama field, we still hope that it will be possible to arrive at a negotiated result that fully respects the considerations of the rule of law, ”said Talos CEO Timothy Duncan, quoted in a statement released by Talos.

“We respectfully call on the government of Mexico to establish meaningful negotiations and consultations with Talos, taking into account all the elements regarding the ideal structure for Zama’s operations and protecting our rights as foreign investors,” a- he added.

Talos said Sener’s decisions, including the designation of Pemex as the operator of Zama, violate the North American trade agreement, the TMEC, in which Canada, the United States and Mexico participate.

The Houston-based company did not detail the other rulings it was referring to, but said it sought to resolve the dispute through consultations and negotiations, avoiding “No more legal actions”, including arbitration.

The Sener did not immediately respond to a question about what Talos said.

The consortium led by Talos but now also made up of German Wintershall Dea and the British Port energy, Zama’s bloc won a tender after the 2013/14 energy reform, which deepened the opening up of the energy sector to private and foreign capital.

Mexican President Andrés Manuel López Obrador is an ardent critic of this reform and assures us that it only served to weaken Pemex and the also state-owned electricity company CFE. His government tried to reverse the reform.

Although Pemex has taken control of the estate, it does not have the $ 2 billion needed to develop the prospect, according to people familiar with the matter.

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