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Mexico Set To Announce Terms Of Next Deepwater Oil Tender

Offshore

Mexico’s National Hydrocarbons Commission will later this week announce the terms for its second deepwater oil and gas tender, and the blocks that will be offered for development. According to NHC’s chief, Juan Carlos Zepeda, the auction may include blocks in three basins: the Perdido Fold Belt, the Salina Basin, and, for the first time, the Cordilleras Mexicanas.

The date for the tender has not been set, but plans are to hold it sometime next January. Unlike previous auctions, for this go around, bidders will have the chance to boost their chances of winning by offering a maximum additional royalty to the Mexican government. Last month, the Mexican finance ministry said that all future oil and gas tenders will include minimum and maximum royalty proposals. If two or more bidders tie on these, cash bonds would be used to break the tie, Reuters recalls.

After the second deepwater tender, Zepeda also said, the NHC will, for the first time, offer non-conventional oil and gas blocks for development. The terms for that tender are to be announced within the next couple of months.

Earlier this month, the NHC awarded exploration licenses for 21 offshore blocks in the Gulf out of 23 tendered. The big winner of the two tenders was Mexican Jaguar Exploracion y Produccion, which snapped up six of ten blocks in the first of two auctions. The total investments pledged by the winners in that tender was US$2 billion for the lifespan of the projects.

Last month, the commission auctioned another 15 blocks, awarding licenses for 10 of them, which could attract investments of US$8.2 billion. The government plans four more auctions by the end of 2018 as Mexico grapples with 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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