Talos redoubles dialogue to avoid arbitration with Mexico

The American Talos Energy is in the dispute notification stage towards a possible international arbitration against the Mexican government, a process that has not started and therefore could not have been suspended as it transpired yesterday, a spokesperson for the oil company told El Economista.

Talos Energy is the operator of the block awarded in Oil Round 1.1 where the first hydrocarbon discovery was made by a private party after 80 years: the Zama field with around 850 million barrels of crude oil equivalent. The discovery of Zama was adjacent to an assignment from Petróleos Mexicanos (Pemex) for which a process of unification of the deposit began, on which the Secretary of Energy determined that Pemex would keep the operation of the field and Talos with 17.3% participation. as a partner.

Talos insists on communicating with the Mexican authorities as it still believes that a solution that preserves value for all parties should be feasible,” a Talos Energy spokesperson told El Economista on Wednesday.

This, after according to Reuters temporarily suspended the search for arbitration against Mexico in the midst of high-level talks about one of the most emblematic oil projects in the country, said five sources familiar with the matter.

Sources close to the negotiations explained that the notice of dispute in the face of Talos’s dissatisfaction with the decision of the Ministry of Energy was given last September and has a minimum duration of 90 days, but it can last much longer.

For now, according to the source, multiple talks are taking place between the two parties, and this can continue without a deadline, as mentioned in different media.

It is in the interest of both parties to reach an agreement, not go to court and achieve what is best for both, that is the current situation,” he explained.

In any case, Talos is in a position to start the arbitration process, which they reiterated is not their priority. If so, a panel will be elected to make the decision on what is best and fairest given the investments and capabilities of both companies. This legal process can be carried out under the North American Free Trade Agreement (USMCA) or the Court of Justice of the European Union, as appropriate to the affected party, which in this case would be Talos.

Talos, as the operator with a 35% stake in its winning consortium of this block, associated with the German Wintershall Dea and the English Premier Oil in Block 7 of Round 1.1 of the previous administration, discovered the Zama field in 2017. Subsequently, the Zama field was named a 2017 Wood Mackenzie Global Discovery of the Year, and the field was fully assessed in mid-2019. An independent third-party reserves auditor estimated discovered recoverable resource volumes to range from approximately 735 to 950 million barrels of oil. oil equivalent, and Zama could produce more than 160,000 barrels of oil equivalent per day once fully developed, Talos said.

Zama is located 70 kilometers from Dos Bocas, Tabasco, in the oil province of the Cuencas del Sureste del Golfo de México, at an average water depth of 150 meters.

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