The government is offering 14 shallow water blocks of the Gulf of Mexico valued at an estimated total of $17 billion. US, European, and Asian companies will be competing for contracts in the first of five installments in the so-called Round One.
First Of Five
The other four installments in Round One are as follows:
- September 30: The award of nine already-discovered shallow water fields in five blocks;
- December 15: The award of 26 onshore fields;
- 1Q16: Offshore Deepwater blocks and extra-heavy oilfields;
- 1Q16: Shale prospects
A Closer Look At Wednesday's Auction
The Wednesday auction marks the first time private and foreign oil companies have been allowed to participate in the Mexican O&G sector, and the first time in history that Mexican oil contracts have been tendered. The 14 blocks are situated in a region of the GOM where Pemex says it has had success over the years.
While foreign companies have eagerly awaited this event, the Mexican government has downplayed expectations of a large sale, estimating that between one-third and half of the 14 blocks will be awarded.
Seven consortiums and 18 individual firms have qualified for the tender. US majors Chevron and ExxonMobil, India's ONGC Videsh, Anglo-Australian BHP Billiton, ~ Russia's Lukoil (see below), France's Total and China's Nexen are among the global companies individually competing in Wednesday's tender.
Five companies have withdrawn from the auction: Pemex (as noted above), Noble Energy, Colombia's Ecopetrol, Switzerland's Glencore, and Thailand's PTT. Further, sources close to Lukoil told the Financial Times that the Russian firm was unlikely to bid.
One issue prompting some firms to pull out of the tender, the FT reports, is Mexico's insistence on strict corporate guarantees- either an unlimited parent company guarantee, or $6 billion from an affiliate company- in case of a spill or accident.
The Mexican government has said that the criteria for the tender's success is transparency. The quantity of contracts awarded is a secondary consideration. The government hopes to award 30% to 50% of the shallow water blocks. Read more...