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Over 20 Oil Majors Sign Up for Mexico’s Most Lucrative Offshore Oil Blocks

Mexico Offshore Sector

A total of 21 companies, including the Who’s Who of Big Oil, have registered to take part in Mexico’s deepwater oil auction to be held in December.

Shell, Chevron, ExxonMobil, British BP, French Total SA, Spanish Repsol, Norwegian Statoil and Mexican Pemex are among the major players now registered to bid for 10 blocks in the Gulf of Mexico, Prensa Latina reports.

Proposals for exploration and exploitation will be accepted on 5 December in this fourth phase of Mexican oil auctions.

Reserves in the blocks up for auction are worth an estimated US$10 billion, and this phase is being lauded as the most lucrative blocks. The blocks are in Perdido, near the US maritime boundary in the Gulf of Mexico, as well as in Cuenca Salina southward. Some 76 percent of the country’s potential oil resources are in the Gulf of Mexico’s deep waters, according to Forbes.

Related: Why the Oil Majors Face Inevitable Decline

The Mexican government is hoping to see some US$7 billion in investment pour in from the auction.

“Right now, the Gulf of Mexico is the one region in the world where there is so much intense exploration activity going on,” Juan Carlos Zepeda, the president of Mexico’s National Hydrocarbons Commission, told reporters.

“Exploration in deep water can take as long as eight years and production can be up to 10 years, so the current low prices don’t really have a big effect on these projects,” he added.

Related: The Offshore Oil Business Is Crippled And It May Never Recover

During the previous auction phase, for offshore blocks, a total of 51 companies bid and 25 contracts were awarded. In the first phase of auctioning, a disappointing two out of 14 shallow-water blocks were awarded and three out of five were awarded in phase 2.

The qualifications for bidding in this latest phase indicate this is a supermajor endeavor. Combined assets have to be at least US$10 billion or US$2 billion in equity with vast drilling experience in deep waters. Contracts will be awarded to up to 50 years.

Overall, through all phases of the auction, Mexico is eyeing US$44 billion in foreign direct investment, according to Forbes.

By James Burgess of Oilprice.com

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