Repsol plans US$600mn investment to develop Mexican deepwater oilfield

Spanish oil and gas major Repsol could invest up to US$600mn with its partners in developing a deepwater field in Mexico, the company stated a week after President Claudia Sheinbaum outlined her plans to open up the country's upstream to international operators.

Block 29, located in the Salina basin in the Gulf of Mexico, is on schedule to produce first oil in 2028, CEO Josu Jon Imaz told an earnings call on Thursday.

“Block 29 could be 60,000b/d gross production… and could be a development with capex of around US$500mn to US$600mn,” Imaz said.

Repsol discovered oil in the block in 2020 at the Polok and Chinwol exploration wells.

In 2024, Repsol increased its holding in the block from 30% to 65% with the acquisition of interests from PTTEP and Petronas. UK-based Harbour Energy has a 25% stake.

At the end of the year, Repsol awarded the contract for front-end engineering design (FEED) to Houston-based McDermott. Repsol plans to develop the block using a floating production, storage and offloading vessel.

State oil company Pemex dominates oil production in Mexico, with 94% of crude output.

Last week Sheinbaum unveiled new legislation that she said could increase the share of the private sector in production to 10%.

Pemex may choose to leave deepwater fields to private operators, Sheinbaum said.

Block 9 prospects

Repsol holds a 50% stake in block 9, which is adjacent to block 29.

In July 2024 Eni, the operating partner in block 9 with the other 50%, made a discovery at the Yopaat-1 well with potential of around 300-400Mboe (million barrels of oil equivalent).

“Our plans in Mexico were reinforced by the positive results of the Yopaat-1 well,” Imaz said on Thursday. “There is room to analyze how to develop all these areas in the mid-term.”

In 2024, Repsol allocated 32% of its exploration budget to Mexico, behind only the US with 38%.

Downstream update

In the downstream, Imaz said that like other companies, Repsol has recently experienced problems with high levels of water content in the crude delivered to its refineries by Pemex.

“We had to reduce in one or two of our refineries the distillation capacity because of the water problem,” Imaz said.

The total cost to Repsol was US$15-16mn.

Meanwhile, the possible imposition of US tariffs on Mexican and Canadian crude would result in greater oil supply to European refineries, Imaz told the call.

“Any difficulties to use Canadian or Mexican heavy oil in the North American or US market means more products in the market, higher discounts and opportunities for Repsol’s refineries."