Oil Rigs Undergo Repairs After Hurrican Katrina

Mexico’s efforts to attract foreign private investment to its oil and gas industry for the first time in over seven decades only resulted in two companies registering successful bids for the 14 blocks that were on offer in the Round One leasing auction on July 15. According to the Secretaría de Energía de México (SENER), the two contracts – both awarded to a consortium consisting of Sierra Oil & Gas of Mexico, Talos Energy of the United States, and Premier Oil of the UK, are estimated to result in $2.7B investment over their lifetime.

However, the results are extremely disappointing given that 49 companies paid $365,000 each to enter geological data rooms and 25 of those companies pre-qualified to make bids. Major international oil companies, including Chevron, ExxonMobil and Total, opted not to bid on any of the 14 shallow water offshore blocks on offer. Mexican officials attributed the results to low oil prices, which have been halved over the past year. But considering that state-owned Petroleos de Mexico (Pemex) was allowed to secure the most favorable blocks and the poor quality of the remainder available to bidders, many oil companies have repeatedly stated that Mexico must make its contract terms more attractive.

The Mexican government has planned four more auctions as part of Round One that include deepwater oil fields and onshore drilling, which are expected to attract more interest from major players. However, the government will be forced to revisit a number of contractual and regulatory issues in order to garner greater interest from major international oil companies.

Originally published by EnerKnol.

EnerKnol provides U.S. energy policy research and data services to support investment decisions across all sectors of the energy industry. Headquartered in New York City, EnerKnol is proud to be a NYC ACRE company.