Page 8 - LatAmOil Week 05 2020

LatAmOil COMMENTARY LatAmOil
 Almost all of China’s biggest crude suppliers are OPEC-plus members, and even before the new coronavirus began to hit oil consumption, the swing producers that make up the OPEC-plus group were in trouble.
e hard-won output deal they reached in December failed to deliver any signi cant cuts to total output levels, and prices have dri ed lower. e deal is currently scheduled to expire at the end of March.
Simply extending the cuts will do nothing to improve the worsening balances between sup- ply and demand, and therefore it will take more to raise oil prices. Deeper cuts will be much harder to agree — Russia, for one, is against them — but that is what is needed to li prices in the face of a Chinese slowdown.
Signs of a slowdown
ere are already signs that a slowdown is hap- pening. Sales of Latin American oil cargoes to
China ground to a halt last week. Persian Gulf producers are starting to receive preliminary nominations from their customers of how much oil they want in March, and that will indi- cate whether Chinese re ners seek to reduce the volumes they li from export terminals in the region.
Non-OPEC producing countries — led by the US, Norway, Brazil and new producer Guyana — were already expected to add two extra barrels for every additional one consumed worldwide this year, squeezing OPEC. e loss of much of China’s oil demand growth will a ect the producer group under the weight of falling oil prices, unless, collectively, they cut their output further.
Noting the unpredictability relating to the spread of the virus and recent uctuations in the oil price, the short term would appear to suggest considerable uncertainty and move- ment in both policy and price. ™
MEXICO
Pemex seeks largest share of Zama field
MEXICO’S national oil company (NOC) Pemex has contested US-based Talos Energy’s claim to the largest portion of Zama, a major o shore eld discovered in the Gulf of Mexico in 2015.
Pemex CEO Octavio Romero Oropeza asserted on January 29 that more than half of Zama’s reservoir lies within Asab, an adjacent block that is under government control. “In Pemex’s analysis, we consider that we have the largest portion of the eld,” he told reporters during President Andres Manuel Lopez Obra- dor’s daily press conference. “Independently of who has what, Pemex will drill exploratory wells tocon rmthisinformation.”
“Pemex also wants to be the operator of this eld,” he added.
His remarks drew criticism from Tim Dun- can, the CEO of Talos. Later on January 29, Dun- can reiterated that his company was basing its claim to 60% of Zama on the technical analysis conducted by an outside consultant, Netherland Sewell & Associates. He also expressed concern about Pemex’s stance, saying that disputes over control of the eld might slow the pace of devel- opment, to the detriment of all parties involved.
Talos and its two non-operating partners, Premier Oil and Sierra Oil and Gas (a subsidi-
ary of Wintershall Dea), won the right to explore
Zama in 2015. Later in the same year, it found oil there.Zamaisnowbelievedtohold700mnbar-
rels of crude, making it the largest discovery ever
made by a private-sector operator in Mexico. 
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