Pemex and Petrobras Team Up to Drill 160-Million-Year-Old Rock Under the Gulf of Mexico

Pemex can't afford to find its own oil anymore. That's behind a new partnership with Brazil's Petrobras announced in June, under which the two state-owned giants will jointly study ultra-deep pre-salt formations in the Gulf of Mexico off Campeche state, according to Rigzone, citing Bloomberg reporting, and confirmed by mexicobusiness.news.

The target: source rocks laid down roughly 160 million years ago, during the Jurassic period, buried miles beneath the seafloor under thick, unstable salt layers. That's eight times older than the producing formations on the American side of the Gulf, which date back about 20 million years, according to Rigzone.

Pemex already tried this once. In 2018 it drilled past 7,800 meters below the seabed and punched through the Campeche salt layer, according to OilPrice.com. The well came up dry. Pemex never released the results publicly and hasn't drilled another exploratory well there since.

However, it never walked away. Mark Rowan, a Colorado-based geologist and consultant specializing in deep Gulf of Mexico discoveries, told Bloomberg that whatever Pemex found "did not scare them away." His read: "That suggests there was no absolute play-killer, and possibly something that gave them real reason to keep testing."

Pemex just doesn't have the money or technical chops to chase that lead alone. That's according to the same Bloomberg reporting carried by IndexBox, which notes Pemex lacks both the capital and know-how for this kind of ultra-deep operation on its own.

Enter Petrobras. Brazil's national oil company spent two decades cracking the code on pre-salt drilling off Rio de Janeiro, where a string of discoveries starting in 2006 turned the country into one of the world's top ten oil producers, according to OilPrice.com. The Tupi field alone has produced more than 4 billion barrels of crude since 2010, an economic value north of $300 billion, according to compoundandhold.

Under the memorandum of understanding, Petrobras brings subsea engineering and deepwater drilling technology to the table. Pemex brings the acreage and, presumably, whatever it learned in 2018. According to mexicobusiness.news, the deal is structured as a state-to-state framework specifically so Mexico avoids opening the blocks to private concessionaires, a politically loaded point in a country where energy nationalism runs deep.

Pedro Zalan, a geologist who spent 34 years at Petrobras working on exploration projects, told Bloomberg that Petrobras is "entering uncharted territory," but added that the geology on the Mexican side of the Gulf "makes it particularly favorable for oil accumulation." Teams from both companies started working through seismic and geological data in the weeks leading up to the announcement.

One counterpoint worth taking seriously: pre-salt success is not a given just because Petrobras pulled it off in Brazil. IndexBox reports that other companies have tried to replicate the pre-salt playbook in Angola, Gabon, and the Republic of Congo, and mostly struck out. Geology that works in the Santos Basin doesn't automatically transfer across an ocean, let alone across the Gulf of Mexico. Salt behaves like a fluid under the heat and pressure found miles down, according to IndexBox, which makes drilling through it technically brutal even before you find out whether there's anything worth producing on the other side.

Money is the other wall here. Wells at this depth can run into the hundreds of millions of dollars each, according to mexicobusiness.news. Pemex is already one of the most indebted oil companies on the planet. If this MOU turns into actual exploratory wells and those wells come up dry again, that's a lot of borrowed capital chasing a formation Pemex already tried and failed to crack once.

None of this happens in a vacuum for global markets either. Rigzone frames the effort as strategically relevant beyond Mexico, noting that recent geopolitical shocks tied to the Iran conflict have exposed the risk of concentrating so much oil supply in the Middle East. A major Gulf of Mexico find would matter to more than just Pemex's balance sheet.

What isn't clear yet: how large any potential find might actually be, whether Petrobras is committing its own capital or purely its technical staff, and what a commercial development timeline would even look like if the exploration phase succeeds. The MOU signed in June is a two-year agreement to evaluate the formations, according to mexicobusiness.news, not a commitment to drill. Whether Pemex and Petrobras move from seismic studies to an actual new well, and when, is the next thing to watch.