Talos Energy comes in to save the ailing Mexican oil & gas industry

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Posted by LLJ43 | Posted in Business, Industry | Posted on 27-11-2017

Mexican oil and gas industry is expected to return to its profitability after the government opened up the sector to foreign investors. The government took control of the industry in 1938 by establishing Petroleos Mexicanos (Pemex), which has been the sole player in the industry. However, even with the nationalization, the Mexican oil and gas sector continued to perform dismally forcing the government to open it up to private investment.

Reasons for privatization of the sector

Various factors prompted the Mexican government to take the hard decision of opening its oil industry to the private companies. One of the reasons was as a result of the ailing Mexican economy. The energy sector in the country has been performing dismally despite the huge potential that it carries in contributing to the country’s economy. The oil and gas prices have also been unstable, which has significantly affected other sectors of the economy, especially those that rely on energy.

That is why the government decided to open up their coastal waters to foreign companies after eight decades of running the industry under a monopoly. In 2015, the Mexican government engaged foreign companies in a thorough and tough bidding process, and three of them emerged as the best. These companies are the Houston based Talos Energy, Mexico-based Sierra Oil and gas, and London-based premier Oil Company.

The three companies won the rights to prospect the Mexican waters in mid-2015. The companies have already launched a mega project that is expected to make significant changes to the Mexican oil and gas industry. The three companies will share profits according to their contribution to the project. Talos Energy will take home 35 percent, Premier 25 percent, and Sierra is the majority shareholder with 40 percent.

The project is ongoing, and so far the prospects are looking good. Geologists and other industry experts have examined the wells and have reported that the gulf could be holding from 100 million to 500 million barrels of crude oil.

Talos energy is playing a crucial role in the project. The company was established a few years back when employees of another holding firm decided to invest millions of dollars into the company. The huge investment enabled Talos energy to start with a strong position in the market.

https://www.crunchbase.com/organization/talos-energy

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