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Mexico Plans Fourth Licensing Round For 2018

Mexico aims to squeeze in another oil and gas lease auction by the end of this year in an attempt to finalize a growing roster of drilling deals before a new administration takes the reigns, according to a new report by Reuters.

“We have three auctions already announced (for this year) and we expect one more before the end of this presidential period, which is for heavy crude in shallow waters,” Mexico’s Deputy Energy Secretary Aldo Flores said on the sidelines of CERAWeek in Houston.

Back in January, the Mexican government awarded 19 deep water blocks to a slew of companies for development, bringing $93 billion in foreign direct investment to the country.

Shell snapped up 9 out of the 19 awarded blocks and bid aggressively on the deepwater blocks closest to the U.S. maritime border. Six months earlier, Shell had made a large deepwater oil discovery on the U.S. side of the Perdido area. Since oil firms are not legally obliged to announce discoveries, Shell postponed the announcement of the discovery until the day of the Mexican auction, as it wanted to secure the adjacent blocks in the Mexican waters.

Half of the nation’s oil comes from drilling in shallow waters in the Gulf of Mexico. New investment was necessary to guarantee supply to sizeable U.S. customers on the other side of the border. National output is currently on the decline.

The Mexican oil regulator and the national oil company PEMEX are also in talks to open heavy oil drilling opportunities to private actors, Reuters reported.

“There is a very large potential there. We are seeing this (project) as a package, but have not yet defined the specific model for it. We are evaluating it,” Flores said.

By Zainab Calcuttawala for Oilprice.com

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  • RefCor on March 08 2018 said:
    Hmmm, Obrador has just announced that if elected (an almost certainty) that his administration will review all leases (60 plus) issued over the past 4-5 years to ensure that they are "fair to Mexico". This can be decoded as "I am going to charge you more than you have already agreed to pay". Nice.

    Now, given this signal, why would anyone risk their capital on the 2018 leasing round in such a climate of uncertainty in Mexico? This just means more purchases of Canadian crude to make up for the loss of any potential Mexican sourced crude 5-7 years down the road.

    Obrador will slowly turn PeMex into PdVSA. It will take a while, but he will accomplish it.

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