Mexico's state oil company Pemex and a private consortium led by U.S.-based Talos Energy Inc. have been instructed to come to an agreement detailing how they will jointly develop a large offshore oil find, the energy ministry said July 8.

The formal instruction from the energy ministry, dated July 7 but announced in a statement on July 8, follows a determination that the Zama discovery made in the Talos-operated block in the Gulf of Mexico extends into Pemex's neighboring block.

The so-called unification of Zama, in which the parties must determine which company will run operations of a joint development and come up with a preliminary split of the shared reservoir, marks the first time in Mexico such a high-stakes deal is being negotiated.

Discovered in 2017, Zama is believed to contain nearly 700 million barrels of oil, making it the biggest new find in Mexico notched by a private company in decades.

Prior to a landmark 2013 overhaul of Mexico's oil sector, which ended Pemex's longstanding monopoly, only the state-run firm was legally allowed to explore for and develop oil and gas projects in the country.

The energy ministry said in its statement that Pemex and Talos Energy have 120 working days to present a unification agreement to jointly develop the Zama reservoir in a way that would maximize its value.

The Talos-led consortium also includes Germany's Wintershall Dea and Britain's Premier Oil.

Both Pemex and Talos have claimed that a majority of the reservoir's riches lie it its block, even as Pemex has yet to drill any exploratory wells on its side while Talos has drilled four.

If the two companies fail to reach an agreement, the energy ministry can ultimately decree which firm will run Zama.

Neither Pemex or Talos immediately responded to requests for comment.

Offshore