Mexico is ending nearly 70 years of self-imposed isolation of its upstream petroleum industry from foreign participation.
As a direct result of the dramatic turnaround by the Mexican government, state operator Pemex is preparing to expedite the contracting of private investment, with an auction as early as next month of three oil field operating contracts to private companies.
Carlos Morale Gil, head of exploration and production at Pemex, indicated that the summer awards will be followed by two further auctions, one before the end of the year and another in early 2012, with the granting of deepwater offshore exploration tracts in the Mexican sector of the Gulf of Mexico.
This is a very important step forward for Mexico and the international oil & gas community, which includes the huge supply chain capability resident in the UK, especially in and around Aberdeen. Indeed, cultivating opportunities in Mexico has been a priority in north-east Scotland for some time.
Announcing the forthcoming licence auctions, Morales said: “By the end of next year, we believe we will have more than 20 areas awarded.”
While it has wanted to bring in foreign partners, Pemex has hitherto been forbidden to involve foreign companies in Mexican oil & gas investment.
Now the door is ajar; but the terms of engagement will be tough, with successful foreign companies being restricted to working as contractors for a fee. They will not be allowed to hold a direct share in produced hydrocarbons.
Mexico wants to lift its oil production to 2.6million barrels per day by the end of this year, and 2.7million by the end of 2012. Current output is some 2.55million bpd. The expectation is that foreign companies will account for some 25,000bpd by the end of 2012.
Pemex will now go ahead and charter further drilling capacity to develop new discoveries and sustain the production from veteran oil fields, such as its giant but fast-failing Cantarell field located in the Bay of Campeche.
Morales said: “Right now we’re working with about 54 offshore rigs and another 120 land units. This year we will probably get to about 80 marine rigs and some 15 more land rigs.”
The number of rigs operating in Mexico fell sharply last year, as Pemex switched strategies at its troubled and expensive Chicontepec project, which is falling short of production targets.
The onshore Chicontepec basin pumped an average of 47,000 barrels a day in the first three weeks of March, versus an average of 45,000 barrels a day in February and 41,000 barrels a day for 2010.
Chicontepec has repeatedly missed production targets despite billions of dollars in investment, making it subject to criticism by politicians.
Pemex has defended itself, saying the project is making money on strong oil prices, and that it will soon use new flexible contracts to encourage more efficient production.
A Mexican government report released in January discussed the problems and slashed the Chicontepec target for peak output by nearly half to 377,000bpd.
The field is now not expected to reach the top of its production curve until 2025, eight years later than previous forecasts.