Pemex and Petrobras Bet Big on High-Risk High-Reward Drilling Off Mexico
Mon, August 24, 2026 at 12:00 AM GMT+3 4 min read
Mexico's state oil firm Pemex and Brazil's national oil company Petrobras are joining efforts and expertise to drill prospects in Mexican waters in the Gulf of Mexico, hoping to unlock huge oil resources from source rock formations that are miles deeper and eight times older than the currently producing formations in the U.S. Gulf.
Exploration in the Jurassic formations deep under the Mexican Gulf seabed in the Campeche Bay carries high risks, but the reward in case of a discovery could be enormous, geologists and analysts tell Bloomberg.
Back in 2018, Pemex drilled more than 7,800 meters (25,600 feet) below the sea floor and penetrated the Campeche salt layer in an exploratory well that was declared unproductive. The Mexican oil giant hasn't ventured new exploratory wells in the area since then, but industry experts believe that Pemex may have found something of great geological and/or hydrocarbon-bearing potential, which has prompted it to pursue exploration further.
Pemex hasn't shared publicly any results of its 2018 drilling campaign offshore Campeche, but analysts say there is a reason why the Mexican oil giant hasn't abandoned efforts to find huge resources and turn around years of declining domestic oil production from legacy wells.
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"Apparently what Pemex found did not scare them away," Mark Rowan, a Colorado-based geologist and consultant who specializes in deep Gulf of Mexico discoveries, told Bloomberg.
"That suggests there was no absolute play-killer, and possibly something that gave them real reason to keep testing," Rowan added.
But heavily-indebted Pemex can't do it on its own drilling deep beneath the sea floor. That's why it has partnered with Brazil's Petrobras, which has two decades of experience drilling in the pre-salt layer offshore Brazil, where it has opened one of the most prolific offshore oil plays in the Santos and Campos Basins.
The pre-salt discoveries in these basins have propelled Brazil into the top ten of the world's biggest oil producers in the past decade.
In June, Pemex and Petrobras, the biggest oil companies in Latin America, signed a memorandum of understanding for strategic and technical cooperation to assess, develop, and jointly execute projects, including opportunities in Exploration and Production (E&P).
The companies will evaluate development opportunities in deepwater and ultra-deepwater areas, including assets located in the Gulf of Mexico.
"The partnership also includes the exchange of technical knowledge, technologies and best practices, leveraging Petrobras' recognized expertise in highly complex offshore operations," Brazil's oil giant said.
Drilling into Jurassic source rocks offshore Mexico is indeed a highly complex offshore operation, with high execution risk. These formations lie much deeper and are much older than the formations in the U.S. waters in the Gulf, where oil firms, including supermajors Chevron, Shell, and BP, for decades have been pumping oil that accounts for about 14% of total U.S. crude oil production.
The risks in Mexican waters are higher, but so are the potential rewards. If the Pemex-Petrobras partnership successfully drills and proves hydrocarbon resources under the salt layer, it could open a major new province of oil and/or gas that could change the fortunes of Pemex.
The Mexican state-owned oil company has seen output decline in recent years and has relied on government financial support to refinance its huge debt obligations.
Pemex also reported in July a second-quarter net profit down by 70% from a year earlier, despite the oil price rally in the April-June period due to the Middle East crisis. The company continued to struggle to boost production and pumped, together with partners, an average of 1.66 million barrels per day (bpd) of crude oil and condensate in the second quarter. That was below the Mexican government's target of 1.8 million bpd of oil production.
A potentially successful high-risk but high-reward campaign offshore Campeche could go a long way to turn the fortunes of Mexico's oil giant.
By Tsvetana Paraskova for Oilprice.com
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