MEXICO CITY: US oil major Chevron Corporation will focus on studying the geology of its block in Mexico’s deepwater Gulf during the first four-year phase of its contract, rather than drilling new wells, a senior executive said on Thursday.

The company, which leads a consortium that includes Mexican state oil firm Pemex and Japan’s Inpex, won the rights to deepwater Block 3 at auction late last year.

The exploration plan calls for the consortium to invest $37 million over four years, according to the National Hydrocarbons Commission (CNH), which expects to approve the plan in January.

The auction for rights was part of a sweeping 2013-14 energy reform that ended Pemex’s decades-long monopoly, as the government sought to reverse a decade of declining oil and gas production.

“Block 3 is very complicated and we want to use these first few years to better understand the geology,” said Evelyn Vilchez, Chevron’s top executive for exploration and production projects in Mexico, at a briefing with reporters in Mexico City.

The block is located in the productive Perdido Fold Belt which straddles the U.S.-Mexico maritime border.

Commercial production will likely take between 10 to 16 years to begin, with the time frame depending on successful exploration efforts plus other factors, she added.

Chevron has previously said it is also entering into Mexico’s newly opened retail fuel market, with plans to open 350 gas stations over the next three years.

Reuters