March 3, 2017 / 11:53 PM / 7 months ago

Pemex, BHP Billiton deep water tie-up eyes first well by end of 2017

MEXICO CITY, March 3 (Reuters) - The first-ever joint venture in Mexico’s deep waters could begin drilling its first oil well by the end of this year, a top official with national oil company Pemex said on Friday.

In December, Pemex teamed up with Australian mining and oil giant BHP Billiton Ltd to develop its Trion block in the Gulf of Mexico, a partnership that was sealed on Friday in a signing ceremony presided over by Mexican President Enrique Pena Nieto.

Javier Hinojosa, Pemex’s chief of exploration and production, said in an interview that the two partners could begin developing the project relatively soon.

The drilling of a so-called delimiting well “could happen by the end of this year,” while a second, exploratory well would “certainly” go forward in 2018, Hinojosa said.

Both wells are part of a minimum work program set out in the 35-year license contract covering Trion, which also calls for the acquisition and processing of new three-dimensional seismic data.

BHP Billiton was selected to be Pemex’s partner on the Trion block at a competitive auction in early December managed by the National Hydrocarbons Commission, Mexico’s newly empowered oil regulator. The partnership is the fruit of a sweeping sector overhaul finalized in 2014 that ended Pemex’s decades-long monopoly and allows joint ventures in exploration and production of oil and gas with equity partners.

The Trion project is expected to require some $11 billion in investments over the course of its life. Pemex will not have to contribute funding for the project for at least the next three years.

The signing ceremony at Pena Nieto’s official residence was also attended by BHP Billiton Chief Executive Andrew Mackenzie.

“Today marks the beginning of what we hope will be a long and fruitful relationship between BHP Billiton, Pemex and Mexico,” said Mackenzie, who pledged to share the company’s deep water expertise and best practices.

Trion is located near the U.S.-Mexico maritime border in the Perdido Fold Belt of the Gulf of Mexico, containing estimated reserves of 485 million barrels of oil and located some 8,430 feet (2,570 meters) below the surface. (Reporting by David Alire Garcia; Editing by Jonathan Oatis)

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