October 2, 2019 / 8:10 PM / 18 days ago

UPDATE 1-Hokchi, Wintershall and Talos give up oil contract in Mexico's Gulf

(Adds confirmation by regulator, quote, context)

MEXICO CITY, Oct 2 (Reuters) - A consortium formed by Hokchi Energy, Talos Energy and Wintershall Dea has given up a Mexican oil contract in the Gulf of Mexico's shallow waters due to lack of commercial discovery, the country's oil regulator said on Wednesday.

As part of Mexico's flagship energy reform, the consortium in 2015 was awarded a contract to explore the block, area 2 of Mexico's first shallow-water round.

U.S. Talos and Germany's Wintershall also participate in a neighboring venture, the Zama project, which has found nearly a billion barrels off Mexico's southern Gulf coast and is now in talks with state-run Pemex to decide who will operate it.

Hokchi, for its part, was approved last year a $2.5-billion development plan for the Hokchi field, also in the Gulf's shallow waters, that includes the installation of two platforms and an onshore processing facility to produce up to 147,800 barrels per day of crude.

"This is how this industry is, this is how the exploration activity is. That's why I personally believe it is desirable to have more and more exploration," Sergio Pimentel, a commissioner from Mexico's oil regulator, the National Hydrocarbon Commission, said during a Wednesday session.

Out of two drilled wells in search of oil and gas at the area it decided to give up, gas found in the first well was not commercially viable while the second well got flooded by water.

Mexico-based Hokchi, partially owned by Argentine producer Pan American Energy LLC, has a 47.5%-interest in the consortium, while Wintershall has 27.5% and Talos the remaining 25%.

Reporting by Adriana Barrera and Ana Isabel Martinez Editing by Marguerita Choy

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