With OPEC’s meeting approaching and…
Stanford Professor Tony Seba predicts…
In December the Mexican congress cast an overwhelming vote in favour of opening up the country’s oil and gas sector to foreign firms for the first time in decades, allowing the government to offer contracts and exploration licenses to multinationals in the hope of reversing the country’s constantly falling levels of oil production.
Before any of the licenses are offered up to foreign bidders the state-owned oil company Petroleos Mexicanos (Pemex) will be offered the opportunity to apply for whichever licenses and stakes it wants. Due to its lack of expertise in deep-water fields it is assumed that the company will concentrate on shallow-water licenses only.
Carlos Sole, a partner with the law firm Baker & Botts, explained to reporters that Pemex “has been open in recognizing its limitations in the deep-water space and in unconventionals. It would be unexpected for Pemex to say these are fields we want, even though we lack the expertise.”
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Pemex has a tight deadline of the 21st of March, before which it must submit all proposals for existing holdings that it still wishes to control and develop. The energy ministry will then consider these applications and determine which licenses it desires to hand over to Pemex, all before the 17th of September. Any remaining licenses will then be offered to international companies who will begin bidding in future auctions.
It is thought that Pemex will try and retain about 70-80% of its current fields, and might even decide to accept partnerships with other foreign companies on some of these fields in order to benefit from technological and financial resources.
Sole explained that Pemex and the Mexican government are likely to meet all the deadlines that they have agreed to, for dealing with the licences, however it is possible that finalizing the legislation of exactly how the new energy policy will work with foreign companies in terms of the taxation, the national content requirements, and the formation of the contracts will not be ready for the 20th of April deadline set.
By. Joao Peixe of Oilprice.com
Joao is a writer for Oilprice.com