The first round for the opening of the Mexican oil sector

By Adina Moloman

Sources: Industry Week, Stratfor, Agence France-Presse, 2015

Mexico’s Congress approved last year a landmark energy reform that allows foreign companies to manufacture in Mexico competing in the country’s energy sector on equal footing with Pemex for blocks in many of Mexico’s present and future auctions. Pemex, the government’s Mexico Corporation was the only company allowed to explore and produce oil in the country.

The Mexican government prepared last year a first round for the opening of the oil sector, which has attracted many transnational corporations from the energy sector to enter to an auction despite falling crude prices. The government announced that it would auction off 14 shallow-water blocks in the Gulf of Mexico. The institution in charged of the production-sharing contracts, profit-sharing contracts and direct licenses for the 14 new offshore exploration blocks is the National Hydrocarbons Commission.

The government is estimating an investment of US$1 billion per every new offshore exploration block with a combined production of more than 80,000 barrels per day.

According to government officials, 46 oil companies have announced their intention to participate to the bidding action but only 23 oil companies are being vetted to see if they qualify for the auction. Those companies had the access to seismic, geological and other data from January 15, 2015. Bidding for the offshore exploration blocks will end on July 15, 2015, and the winners will be announced in short time.

So far at least two energy transnational corporations are pre qualified on the first round, Chevron and Shell.

PEMEX can bid on the offshore exploration blocks like any other oil company.

To strengthen its position Pemex signed agreements to cooperate in oil and natural gas exploration with two giant oil companies, ExxonMobil and Petronas. Another thing is that oil companies can attempt to joint ventures agreements for a given block.

Shortly after the first round auction is complete, it will hold subsequent auctions for unclaimed deep-water offshore blocks, unconventional natural gas blocks and onshore heavy oil blocks. This will allow for a number of international oil companies to begin significant exploration across Mexico’s energy sector by 2016