Mexico Auctions Two-thirds of Blocks in Shallow Water Oil Tender
Mexico on Monday auctioned two-thirds of the shallow water oil and gas blocks up for grabs in the latest round of its energy market opening, surpassing the cautious estimates of officials last week.
Italy's Eni, Colombia's Ecopetrol and Capricorn Energy, a unit of Edinburgh-based Cairn Energy , were among the companies at the forefront of the bidding for 15 blocks in the southern Gulf of Mexico.
Ten of the 15 blocks were taken up in the auction.
Eni took one of the blocks by itself and two in consortium with other companies. One comprised Capricorn and Mexican oil firm Citla, the other was with Citla alone. Citla also partnered with Capricorn to win another block.
Russia's Lukoil also took a block in the auction, as did a tie-up between France's Total SA and Royal Dutch Shell Plc.
The potential output from the shallow water oil and gas blocks auctioned could total 170,000 barrels per day of crude equivalent and investments could reach $8.2 billion, Energy Minister Pedro Joaquin Coldwell told a news conference.
The auction was the latest step in Mexico's bid to attract more private investment to the industry after Congress changed the constitution in late 2013 to end the 75-year production and exploration monopoly of state oil company Pemex.
The Mexican state firm won two blocks in Monday's bidding - one in consortium with Germany's Deutsche Erdoel AG, and another with Ecopetrol. The Colombian firm also won a block with PC Carigali, a unit of Malaysian oil firm Petronas.
Spain's Repsol combined with the company Sierra Perote to win another block in the southern Gulf of Mexico.
Top government officials told Reuters before the auction they were hopeful that Mexico would assign at least one-third to 40 percent of the blocks in the shallow water round.
The auction was the fifth since the energy reform, including one deep water and two previous shallow water tenders. They yielded 39 contracts signed with forecast investment over their lifespan of $48.8 billion, according to energy ministry data.
Mexico hopes that by opening up the energy sector it will help reverse years of declining crude oil output.
Total crude oil production in Mexico now stands at 2.01 million barrels per day, down from a peak of 3.38 million in 2004.
(Reporting by Adriana Barrera; Editing by Bill Trott and Leslie Adler)
(Reporting by Adriana Barrera; Editing by Bill Trott and Leslie Adler)
February 2024
