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Mexico May Have Just Held Its Last Oil Auction

Offshore GoM

In what may be Mexico’s last oil auction amid a possible presidential election shakeup, the Mexican authorities on Tuesday auctioned off 35 oil and gas areas, awarding its first blocks in the Burgos basin, but overall interest was muted.

Fourteen major international companies had been pre-qualified to participate in the auction—including Eni, Pemex, Petronas, Repsol, Shell and Total. A total of 22 consortia had also qualified to bid.

Reuters reported that the first blocks awarded went to Repsol and Premier Oil in the Burgos basin. Areas in two other basins--Tampico-Misantla-Veracruz and Cuencas del Sureste—were also on the auction block, but the first sparked only mild interest, and the results of the second were still unknown.

Repsol won two blocks with 400 million boe of combined prospective light oil and wet gas resources. Premier Oil also won two blocks with 190 million boe of combined prospective resources. This auction is the first time Mexico has opened the Burgos marine region to private operators.

Demand for Mexico’s oil offerings is mixed right now, with presidential elections looming on 1 July, and expectations high that Andrés Manuel López Obrador, head of the newly created National Regeneration Movement (MORENA), will win the poll, after incumbent Enrique Peña Nieto barred from running.

The political atmosphere has not been conducive to luring in major investment; particularly since Obrador—a key figure who has emerged as a defender of the rights of Mexico’s indigenous peoples—threatened to review more than 90 contracts signed since Mexico opened its oil market up to foreign investment. Related: $70 Oil Could Spark An Offshore Oil Boom

In February, Obrador said that if elected, he would ask for auction plans to be cancelled.

Mexico has two more oil and gas auctions lined up for this year—one in June and one later in the year, with more than 100 areas up for grabs.

However, the chances of all blocks finding investors are mixed in light of the political worries, despite a recent softening of Obrador’s rhetoric.

For the Tuesday auction, 19 of the 27 blocks in the first two basins received no bids, while results from the third basin were not yet available at the time of writing.

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By Damir Kaletovic for Oilprice.com

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