Mexico’s oil regulator on May 24 approved a promising new deepwater block for state oil company Pemex, but conditioned the allotment on the firm developing the area with a partner that would eventually operate it.

The new Chachiquin area, adjacent to Pemex’s Nobilis-Maximino Block, could produce 80,000 barrels per day of oil once it reaches peak output, according to the regulator's estimates.

Development of the area is not expected to begin until 2024 at the earliest.

“It’s incredibly important for the country to move forward with deep water projects,” said Hector Moriera, a commissioner with the regulator, known as the CNH, adding that 53% of Mexico’s prospective oil resources are in deep water deposits.

“That’s where much our country’s oil future lies,” he said.

An auction to pick a partner for Pemex in the Nobilis-Maximino Block, which would only be Mexico’s second deepwater joint venture (JV), was approved last month by the company’s board and is set for year-end.

Nobilis-Maximino is estimated to hold reserves of some 500 MMbbl based on data gathered from five wells drilled in the past, and is located just south of Mexico’s maritime border with the U.S. in the Perdido Fold Belt, where dozens of successful projects have been developed on the U.S. side of the same basin in recent decades.

The JV partnerships are fruit of a sweeping sector overhaul finalized in 2014 that ended Pemex’s decades-long monopoly and for the first times allowed joint ventures in E&P of oil and gas with equity partners.

Offshore