Lukoil takes block position off Mexico for $435mn
Russia's Lukoil has agreed to replace Houston-based Fieldwood Energy as operator of Area 4 off the coast of Mexico, the company announced on July 5, in a deal worth $435mn that expands its operations in the oil-rich Gulf of Mexico area.
Lukoil will also obtain a 50% interest in the area, which comprises two blocks covering 58 km2 of seabed, in waters 30-45 m deep. It contains the 2005 Ichalkil and Pokoch shallow-water oil discoveries, estimated to contain 564mn barrels of oil equivalent in recoverable reserves, of which over 80% is crude oil, Lukoil said.
Fieldwood and its partner PetroBal, a division of Mexican conglomerate GrupoBal, are targeting first oil from the site in the third quarter of 2021. The project is to be developed in three phases that will bring output to a plateau rate of 115,000 boe/day.
Fieldwood has not commented on the deal. The company entered Chapter 11 bankruptcy in August last year, and its restructuring is ongoing. In updated development plans filed with Mexican regulators last month, it estimated that the project would require $7bn in investments over the course of its lifetime. The first phase will involve two wells tied to a platform.
Lukoil said the acquisition would naturally complement its existing projects offshore Mexico. The Russian company is also exploring Block 12 in the Gulf of Mexico and the onshore Amatitlan block.
Lukoil has sought to build up its international upstream operations in recent years, faced with decline at its mature fields in west Siberia.