Mexico’s latest auction of shallow water licences took place today.
Lukoil, Statoil, Eni, Fieldwood, Pan American, DEA, Petronas, Talos and China’s CNOOC made bids, but did not bid for all blocks available.
Companies who prequalified but chose not to bid included majors Shell and Chevron.
The second phase of the Round 1 auction by Mexico’s National Hydrocarbons Commission, known by its Spanish-language acronym CNH, offered five production-sharing contracts covering nine oil and gas fields.
The first auction in July fell short of the country’s expectations as several majors decided not to participate and only two of the 14 blocks on offer were awarded.
CNH modified the bidding rules and contract models for the second auction.
The five production-sharing contracts covering nine oil and gas fields are awarded by CNH based on which company or consortium offers the biggest share of operational profits to the government via a weighted formula that also includes an investment commitment.
Contract area 1 – Amoca/Mizton/Tecoalli: Winner – Eni – 83.75% (of operational profits to the state).
Contract area 2 – Hokchi: Winner – Pan American Energy 70%
Contract area 3 – Xulum: No bidders
Contract area 4 – Pokoch/Ichalkil: Fieldwood Energy/Petrobal 74%
Contract area 5 – Mison/Nak: No bidders
Mexican President Enrique Pena Nieto is counting on foreign oil investments to bolster Mexico’s flagging economy. His administration last year successfully lobbied for constitutional changes de-nationalising the oil industry to help lure and estimated $62.5billion in private investment and grow the economy by 2018.
Alfredo Alvarez, EY’s Mexico oil & gas leader said: “Overall, the auction was an improvement from the last round, which we attribute to the attractive production fields that were available as well as to some of the adjustments that have been made since the first auction in July 2015.
“We ultimately saw three contracts result from strong bids in attractive fields. This accounted for sixty percent of the blocks available.”
Mexico will offer more than 900 areas out to tender over the next five years covering 178,554km2 and containing estimated reserves of 107Bboe, according to the energy ministry.
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