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Mexico’s National Hydrocarbons Commission has taken on Trafigura as a crude oil trading partner, making it the first foreign company to get the right to market Mexican crude. The three-year contract is for oil produced from projects under Mexico’s reformed oil contracts. Until now, only the commercial division of state energy major Pemex was eligible for trading the country’s oil and gas.
Under a 2014 energy reform by the Pena Nieto government, however, oil traders will now start to compete directly with each other, so we may see other entrants in the field, too. The NHC awarded Trafigura the contract because it was the only participant in the tender in addition to Pemex’s marketing arm PMI, and because it offered a lower price per barrel than PMI, at US$0.18, versus US$0.21 for PMI.
The significance of the deal may be only symbolic at first. The average daily production rate under the new production-sharing contracts is only about a few thousand barrels. Yet this is bound to increase substantially in the future: pretty much anyone who’s anyone in global oil has paid for a piece of the Mexican offshore oil pie that the government has been eager to distribute amid falling production and reserves, and growing demand for both oil and gas.
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Over the next year, the NHC said, Mexico will sell an estimated 8.02 million barrels of crude oil and 4.07 billion cu ft of gas. For gas, the state will remain in charge of sales, through the Federal Commission of Electricity.
Mexico has been very active in stimulating the development of new oil and gas reserves, but its latest deepwater offshore block tender flopped for lack of interest. Two weeks ago, Mexico’s oil regulator canceled an auction slated for January 31 for a joint venture with state oil company Pemex in a deepwater area containing super light crude oil, because no company had expressed interest in the tender.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.