Mexican oil regulator approves $380 million investment for 2019 projects

MEXICO CITY (Reuters) - Mexico’s oil regulator approved drilling plans on Thursday for five offshore projects with investment commitments totaling about $380 million, more than half of which was pledged for a shallow water block operated by Talos Energy.

The projects are among more than 100 oil and gas contracts awarded by the regulator since 2015. They could lead to significant new streams of production despite President-elect Andres Manuel Lopez Obrador’s frequent criticisms of a 2013 constitutional energy reform that made the projects possible.

“These exploration plans are basically the bet that the international market has made on the potential of these projects,” said Gonzalo Monroy, a Mexico City-based oil analyst.

The Talos Energy-led consortium will drill at least one new well in January as part of its Area 7 contract, next to its Zama discovery announced last year, according to the presentation approved by the regulator, the National Hydrocarbons Commission (CNH).

The consortium, which also includes Britain’s Premier Oil and Mexico’s Sierra Oil & Gas, will invest some $251 million in 2019 in the block, and also included a second “contingent” well in its drilling plans.

U.S.-based McDermott International said on Thursday it was awarded a contract by Talos for design work and engineering services for the Zama project, which plans to be executed with IO Oil & Gas Consulting, a joint venture between McDermott and service company Baker Hughes.

The CNH approved a separate plan by Russia’s Lukoil to drill its Otomi-Oeste well between September and November of 2019, and spend nearly $72 million on its Area 12 block over the course of the year.

Italy’s Eni, meanwhile, plans to drill its Saasken-1 well in its Area 10 block and invest about $51 million on the project in 2019. A second Eni block, Area 14, will see investment of about $5 million next year, but will not see any drilling activity.

A plan was also approved for Spain’s Repsol for its Area 11 block, but does not include any new wells.

Lopez Obrador, a leftist who takes office in December, has been a sharp critic of the landmark energy reform championed by outgoing President Enrique Pena Nieto.

While he has said he will not authorize any new oil auctions until a review of already-awarded contracts has been completed by his team, he has vowed to respect existing contracts.

Reporting by David Alire Garcia and Marianna Parraga; Editing by David Gregorio