The U.S. clean energy industry…
Saudi Energy Minister Prince Abdulaziz…
The state-run oil company PEMEX blamed the failure of a recent deep-water Gulf of Mexico auction in the on competition from ongoing tenders in Brazil, according to a new report from Reuters.
Weak investor appetite for Mexico’s blocks was also due to low oil prices, the company added, although 30 oil companies had at least started the pre-qualifying process.
“(One) factor that affected appetite for new projects was the investment commitment recently taken on by possible bidders,” Pemex said in a statement. Fearing that interest may wane, Mexico reduced the Pemex stake in the project up for tender from 49% to 40%. The oil regulator eventually canceled the tender for the project due to lack of interest.
The disinterest doesn’t bode well for Mexico, who recently opened up its energy industry by ending Pemex’s long monopoly.
Mexico’s competition for this auction—Brazil—had accepted bids for its eight blocks in late October, six of which went to multinational oil majors, including Shell and ExxonMobil. The same firms had been interested in the Nobilis-Maximino blocks before they made deals with Brazil.
“Pemex will continue to promote its partnership strategy in several oil fields that present less technical difficulties and lower risks,” the company said.
Shell is confident that it can produce oil from Brazil’s promising prolific pre-salt layer for less than $40 per barrel, which is why the supermajor made a competitive bid in the Brazilian auction, Wael Sawan, Executive Vice President Deepwater at Shell, told Reuters earlier this year.
Related: The Drastic Drop Off In U.S. Oil Imports
The pre-salt layer holds high-quality and prolific oil reserves, and recent Brazilian reforms have made them more attractive assets, Sawan told Reuters on the sidelines of an oil industry event in Rio de Janeiro in October. Shell believes that it can extract oil from those fields below its targeted breakeven cost of $40 a barrel, otherwise it would not have taken part in the auction, Shell’s manager noted.
“The success rate in the pre-salt is higher than anywhere else,” Petrobras CEO Pedro Parente said. “You need to be where there is high productivity and a low cost of lifting. Pre-salt is one of these areas.”
By Zainab Calcuttawala for Oilprice.com
More Top Reads From Oilprice.com:
Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…
From your source:
QUOTE> MEXICO CITY (Reuters) - Mexican national oil company Pemex on Friday blamed the cancellation of a potentially lucrative deepwater Gulf of Mexico project on weak investor appetite due to competition from recent auctions in Brazil and low oil prices.
Mexico’s oil regulator on Thursday canceled a tender to pick an equity partner for Pemex’s Nobilis-Maximino project, as company interest was not as robust as expected.
Pemex, or Petroleos Mexicanos, on Friday cited a late October deepwater pre-salt oil auction in Brazil for lessening interest in its project. Six of eight blocks in Brazil were awarded to majors, including Royal Dutch Shell and ExxonMobil.
The failure of the tender is a setback for its attempts to open up its energy production after a decades-long monopoly for Pemex.
However, there are nearly 30 similar pending deepwater projects with tenders that are still going ahead. The cancellation should not be interpreted as a lack of industry interest in those, Alma America Porres, commissioner for the National Hydrocarbons Commission (CNH), told reporters.