Mexico Auctions Two of First Seven O&G Blocks

Mexico auctioned only two of the first seven blocks in its initial offshore oil and gas tender on Wednesday, half of the oil fields up for grabs as part of a historic opening of the long-nationalized industry.

 

Both of the shallow water exploration and production contracts were awarded to the same consortium made up of Sierra Oil & Gas, Premier Oil and Talos Energy.

 

In one, the consortium offered 55.99 percent of pretax profits to the state, in the other, 68.99 percent.

 

The other five blocks received no bids, or none that cleared the bar set by the finance ministry.

 

The energy ministry said previously that at least 30 percent, or five contract awards, of the 14 on offer would constitute a successful auction. Blocks that are not awarded can be tendered again at a later date, it has said.

 

The initial phase of the so-called Round One tender, the first of five phases expected to auction 169 oil and gas fields, comes at a time of depressed international crude prices and a decade-long fall in Mexican output.

 

A total of 34 companies, either in consortia or alone, pre-qualified for the first set of 14 shallow water production-sharing contracts, including U.S.-based majors ExxonMobil and Chevron (CVX).

 

But the oil regulator, known by its Spanish acronym CNH, said on Wednesday that only 9 bidders registered for the first phase.

 

The 14 contracts cover areas with nearly 3.8 billion barrels of oil equivalent (boe) in proven, probable and possible (3P) reserves thanks to previous drilling by state oil company Pemex.