PEMEX opts out of Round One of Mexican oil block site auctions in order to focus on other priorities.
Mexico’s national oil company, PEMEX (Petróleos Mexicanos) has joined the list of international energy companies that have opted to exit from Round One of Mexican oil block site auctions, this opens opportunities at 14 sites to other competitors. The reason for PEMEX’s non-participation in the first round is related to the downturn in global oil prices.
Energy Reform and PEMEX
In 2013, Mexico enacted sweeping reforms in the energy sector. The country’s oil and electricity monopolies, PEMEX and CFE, became “productive enterprises of the State.” This designation opened up the Mexican energy sector to competition, and created the opportunity for private companies from around the world to bid for licenses and contracts to explore for, and to produce, oil and gas in Mexican oil block sites and mining areas. The site auctions began early this year. Round One is an offering that includes the first phase of 14 of 169 available onshore and offshore blocks.
PEMEX has joined with other prequalified international companies in declining to bid. Other companies that have withdrawn include Noble Energy, Glencore E&P, Colombia’s Ecopetrol, and Thailand’s PTTEP. The decision for PEMEX, understandably, as Energy Secretary Pedro Joaquin Coldwell pointed out, “You have to keep in mind two factors. Pemex has seen its revenues fall by more than 50 percent due to the decline in oil prices…” Coldwell went on to add that PEMEX will focus instead on conserving capital and developing existing assets. PEMEX also plans to take part in other upcoming Mexican oil block site auctions later in the year.
Despite the departures from Round One, here are many others companies still in the running for the initial offering of 14 shallow water blocks. Individual companies prequalified at this time include:
- Atlantic Rim Mexico
- BHP Billiton
- Cobalt Energy
- Spain’s CEPSA
- Hunt Overseas
- Russian giant Lukoil
- Maersk Oil
- India’s ONGC Videsh
- Canada’s Pacific Rubiales
- Plains Acquisition Corp.
- Premier Oil
Prequalified consortia bidding on the 14 Mexican oil block locations include:
- BG Group alongside Galp Energia
- Italy’s Eni along with CASA Exploration
- Murphy Worldwide along with Petronas
- Pan American Energy along with E&P Hidrocarburos y Servicios
- Talos Energy along with Sierra Oil and Gas
- Tullow along with Petrobal
- Woodside Energy along with Diavaz Offshore and Pluspetrol
The results are to be unsealed July 15th, and the winners will be announced immediately thereafter.