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Mexico’s Oil Future Is In Jeopardy

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Mexico Sees Another Four Oil Tenders By End-2018

Mexico

Mexico is planning to hold four more oil and gas block tenders by November 2018 as part of efforts to ensure the sustainability of its energy industry and make better use of its hydrocarbon reserves. Speaking at a news conference, Energy Minister Pedro Joaquin Coldwell said that in addition to the three auctions already announced, there will be a fourth one, offering a mix of shallow and deepwater blocks, as well as shale gas deposits.

November 2018 marks the end of President Enrique Pena-Nieto’s six-term, and he cannot seek reelection, Reuters notes. A potential successor, leftist Andres Manuel Lopez Obrador, who has often criticized the energy reform Pena-Nieto started when he came into office, has pledged to hold a referendum to remove some parts of this reform.

If Lopez Obrador wins, he may put an end to further oil and gas tenders, which could be among the reasons why the current government is rushing to auction as many blocks as possible while it can.

Coldwell also said at the news conference that the next auction for this year will take place next week, and the terms for the following one, focused on deepwater deposits, should be revealed by the end of July.

Last month, Mexico tendered 15 offshore blocks and awarded ten of them to individual companies and consortia, including Shell, Total, Lukoil, Eni, and Cairn Energy, as well as Colombia’s state oil company Ecopetrol.

Related: Underperforming Energy Sector May Soon See M&A Wave

At the time, Coldwell said the combined output from the ten blocks could reach 170,000 bpd, with investments estimated at up to US$8.2 billion.

The country is fighting declining oil production, which, the energy regulator warned earlier this year, could lead to depletion of its oil reserves in less than a decade unless new discoveries are made. For now, Mexico produces some 2 million barrels of crude daily, compared with 3.38 million bpd back in 2004.

By Irina Slav for Oilprice.com

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