Mexico oil blocks auction surpasses last week’s estimates

Mexico oil

Mexico oil auction called “a great result” by the country’s head of the oil industry regulator. ConocoPhillips photo.

Mexico oil blocks auction could mean $8.2 billion in investments

On Monday, Mexico auctioned 10 of 15 available shallow water oil and gas blocks that were up for grabs as the government opens up the Mexico oil industry to foreign investment.

The shallow water oil and gas blocks were located in the southern coastal waters of the Gulf of Mexico.  Monday’s auction was the fifth since the government changed the constitution in late 2013 to ten the 75-year long Pemex monopoly in production and exploration.

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Italy’s Eni took one of the blocks on its own and then partnered up in a consortium with other companies, including Capricorn and Mexican oil company Citla Energy to buy two more.

Citla and Capricorn also partnered up to win another block, just edging out Eni in a tie-breaker after a hotly contested bid for the ninth block where both bidders made the maximum possible offer.

Lukoil, one of Russia’s largest oil companies, also won one block.  A partnership involving Shell and France’s Total SA also won one of the Gulf of Mexico blocks.

“This is a great result,” Juan Carlos Zepeda, head of the oil industry regulator known as the CNH, told a news conference.

According to Reuters, the potential output from the auctioned blocks could be as much as 170,000 barrels per day of crude equivalent.  Investments could eventually reach $8.2 billion, said Energy Minister Pedro Joaquin Coldwell.

Mexico’s state-owned petroleum company Pemex won two blocks in Monday’s auction: one in a consortium with Deutsche Erdoel AG and another with Columbia’s Ecopetrol.

Ecopetrol also won a block with PC Carigali which is a unit of Petronas.

Repsol and Sierra Perote joined forces to win another block in the southern Gulf of Mexico.

The previous four auctions yielded 39 contracts with expected investment over the lifespan of the projects to be worth about $48.8 billion, according to the government.

The Mexican government is hoping investment in its energy sector from foreign countries will help reverse years of declining oil output.  Currently, total crude production in Mexico is at 2.01 million b/d, down from a peak of 3.38 million b/d in 2004.

 

 

 

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