Mexico selects 26 exploration majors to bid for 14 oil blocks

May 27, 2015 12:00 AM

Chevron, ExxonMobil, Petronas, Statoil, Total are among global energy giants that have been selected by Mexico to submit bids for 14 shallow water blocks covering nine fields that are to be offered for exploration in the first round to be held on 15 July, the country's National Hydrocarbons Commission (CNH) announced.

A total of 26 companies, both individually and in consortia have been approved by the oil sector regulator to submit bids for the blocks as Mexico prepares to open its oil and gas fields to exploration by foreign companies for the first time in 76 years.

Other companies, which sought individual prequalification certificates include Atlantic Rim Mexico, BHP Billiton, Cobalt Energy, Spain's CEPSA, Hess, Hunt Overseas, Russia's Lukoil, Maersk Oil, Marathon, Nexen, India's ONGC Videsh, Canada's Pacific Rubiales, Pemex, Plains Acquisition Corp., and Premier Oil. In addition, seven consortia were awarded prequalification certificates.

These include BG Group alongside Galp Energia; ENI along with Noble Energy and CASA Exploration; Murphy Worldwide along with Ecopetrol, Petronas, and PTTEP; Pan American Energy along with EP Hidrocarburos y Servicios; Talos Energy along with Sierra Oil and Gas and Glencore EP; Tullow along with Petrobal; and Woodside Energy along with Diavaz Offshore and Pluspetrol, according to a statement issued by the CNH.

In order to qualify for the bid round, companies had to have knowledge and experience of working in shallow waters in at least three exploration and production projects, or alternatively in one or in two large-scale projects, which together involve capital investments of US$1 billion.

Additionally, a company keen to be the operator of a project was required to have equity of $1 billion and assets of $10 billion. In the case of consortia, the operating company was required to hold at least a third of the equity.

Analyst firm Wood Mackenzie has estimated that the areas being bid out for exploration have a total of 356 MMboe of 2P reserve

Last year, Mexico's Congress enacted the legislation to reform the nation's energy policies and break some of the monopolistic power of state-owned Petroleos Mexicanos (Pemex). Among the far reaching reforms was a directive allowing foreign investment in Mexico's energy sector.

On Dec. 11, 2014, CNH launched what it has dubbed "Round 1" for bidding on the development of the country's resources, inviting oil and gas companies to bid on the 14 exploratory blocks in the shallow waters off the coasts of the states of Veracruz, Tabasco and Campeche in southeast Mexico. Two months later, CNH invited both Mexican and non-Mexican companies to bid on five contracts to extract oil and gas from nine fields.

In the bidding round; production-sharing contracts with three- to five-year exploration terms will be awarded for these 14 areas. These exploratory areas have prospective resources that are expected to contain light crude oil with low production costs, according to SENER, and each has different minimum investment obligations.

CNH will award the 14 exploration contracts on July 15 and the five extraction contracts on Sept. 30.

According to reports, the CNH board also voted unanimously to extend the deadline for comments on draft contracts and bid terms until June 4. The board also reportedly extended the deadline for final production-sharing contracts and bid terms to June 9.

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