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Global Energy Advisory June 23rd 2017

Mexico awarded 10 of the 15 oil and gas offshore blocks it tendered this week, with the results of the tender exceeding expectations amid increasingly weak oil prices. Winners included Italy’s Eni, Shell, Total, Spanish Repsol, Lukoil, and Ecopetrol, as well as local major Pemex.

The Italian oil and gas giant was the biggest winner, securing licenses for the development of three blocks, two of them in partnership with a Mexican independent, Citla Energy, and one together with a unit of Cairn Energy. Colombia’s Ecopetrol won the licenses to two blocks, in partnership with Pemex on one, and with Malaysian Petronas on another. Shell and Total jointly won the license for another block, and Russian Lukoil was awarded one block. Repsol was awarded a block in partnership with Mexican Sierra Oil & Gas, while Pemex partnered on another block with German DEA Deutsche Erdoel.

According to Mexico’s Energy Minister, the combined output from the blocks could reach 170,000 bpd. Mexico’s total for this year is planned at 1.944 million bpd. Crude oil production in the country has been falling steadily over the last 12 years due to falling investments and depleting fields. Without any new significant finds, Mexico’s current reserves would only last for 9 years, according to the local oil and gas regulator, which makes new tenders rather urgent.

Because of its rather precarious situation with oil reserves, Mexico has been unwilling to join…

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