Category Archives: Energy

Mexico Sweetens Oil Auction to Draw Firms Hit by Low Oil Prices

Gas is flared from a tower on an oil drilling rig operated by Pemex in the Ku-Maloob-Zaap oilfield at Campeche Bay off the coast of Ciudad del Carmen. (Susana Gonzalez / Bloomberg)
Gas is flared from a tower on an oil drilling rig operated by Pemex in the Ku-Maloob-Zaap oilfield at Campeche Bay off the coast of Ciudad del Carmen. (Susana Gonzalez / Bloomberg)

By Laurence Iliff / Wall Street Journal

Mexico’s hydrocarbons regulator has improved the terms for its September oil auction to drum up more interest among cash-strapped international oil firms reeling from falling prices, with industry analysts applauding the move Wednesday as a step in the right direction.

The National Hydrocarbons Commission approved a series of changes in both auction procedures and contract terms that reduce the risk to oil companies seeking to begin operations in Mexico following the nation’s energy opening to private and foreign firms.

The first oil block auction under the energy overhaul, held in July, was considered a failure because only two of 14 exploratory offshore blocks were awarded. Mexican officials promised to find ways to improve the terms for the second auction, which are for five groups of already discovered offshore fields.

Among the 14 companies that have qualified to bid in the next auction are major oil companies like Chevron Corp. and Royal Dutch Shell, national oil firms such as China’s Cnooc Limited, and Mexican upstarts Sierra Oil & Gas and Carso Oil & Gas.

http://www.wsj.com/articles/mexico-sweetens-oil-auction-to-draw-firms-hit-by-low-oil-prices-1440616643

Records show U.S. involvement in oil privatization

Desmog – Records obtained by DeSmog shed further light on the role the U.S. government has played to help implement the privatization of Mexico’s oil and gas industry. They reveal the U.S. government acting as a mediator between Mexico’s government and U.S. oil and gas companies seeking to cash in on a policy made possible by the behind-the-scenes efforts of then-Secretary of State Hillary Clinton’s U.S. State Department.

http://www.desmogblog.com/2015/08/20/records-us-involvement-mexico-oil-gas-privatization-mexican-government-100-percent-its-idea

U.S. approves landmark crude oil export swaps with Mexico

Oil pump jacks are seen next to a strawberry field in Oxnard, California. (Lucy Nicholson / Reuters)
Oil pump jacks are seen next to a strawberry field in Oxnard, California. (Lucy Nicholson / Reuters)

By Timothy Gardner / Reuters

The Obama administration will allow limited sales of U.S. crude to Mexico for the first time, a senior administration official told Reuters, marking another milestone in loosening a contentious ban on exporting domestic oil.

The Commerce Department is “acting favorably on a number of applications” to export U.S. crude in exchange for imported Mexican oil, the official said. Such oil swaps are one of several possible exemptions allowed in the four-decade-old law that otherwise bans most overseas shipments.

The approvals come eight months after Mexico formally sought permission for a swap, a historic step for a nation where oil self-sufficiency has long been a source of pride.

The shipments, likely to be lighter, high-quality shale oil, will help Mexico’s aging refineries produce more premium fuels. U.S. refiners will continue to get Mexican heavy oil, a better match for them than the deluge of light oil coming from Texas and North Dakota.

The licenses, good for one year, will be formally issued by the end of August, the official said. He declined to offer further details on volumes, saying only that the number of approvals was “a handful.”

http://www.reuters.com/article/2015/08/14/us-usa-oil-exports-exclusive-idUSKCN0QJ1RI20150814

Mexico’s falling electricity rates draw manufacturers

CNBC – A number of factors influenced Mexico’s slow but steady rise as a manufacturing hub for multinational corporations, including NAFTA, other trade agreements, cheap labor costs and proximity to the United States. But observers point to another recent development that they see accelerating investment in Mexico and boosting economic productivity: Electricity is getting cheaper.

http://www.cnbc.com/2015/08/10/mexicos-falling-electricity-rates-draw-manufacturers.html

Mexico modifies terms for its September oil auction

The changes make the auctions marginally more attractive but don’t address fundamental issues for some bidders.
The changes make the auctions marginally more attractive but don’t address fundamental issues for some bidders.

By Laurence Iliff / Wall Street Journal

Mexico’s oil regulator on Tuesday modified terms for a September auction of oil fields after a poor outcome at last month’s tender of 14 offshore blocks.

One change allows a company to bid individually for one group of fields and in consortium for a different group of fields, which was prohibited previously. A company can’t bid both alone and as a group for the same fields.

The commission also adjusted the financial guarantees that must be posted by winning bidders. Rather than having a set rate of $6 billion in equity as a financial guarantee for the contract, a winning bidder can alternatively provide a guarantee equaling 18 times the government-set minimum investment for work on the fields.

That change would allow a firm or consortium holding a small number of fields to post less than the $6 billion in equity required, and is designed to attract smaller firms to the auction. The commission also added a requirement that bid winners take out at least $1 billion in insurance against oil spills or other accidents.

http://www.wsj.com/articles/mexico-modifies-terms-for-september-oil-auction-1438712100

Mexico to postpone deep water auction, adjust next oil tender terms

Gas is flared from a tower on an oil drilling rig operated by Pemex off the coast of Ciudad del Carmen last year. (Susana Gonzalez/Bloomberg)
Gas is flared from a tower on an oil drilling rig operated by Pemex off the coast of Ciudad del Carmen last year. (Susana Gonzalez/Bloomberg)

By David Alire Garcia / Reuters

Mexico, which has started to open its nationalized oil industry to additional private investment, will postpone auctions for deep-water oil exploration and production contracts and adjust the terms of upcoming tenders after an inaugural oil auction failed to meet the government’s modest expectations.

Energy Minister Pedro Joaquin Coldwell told local television the government will change rules that scared off potential bidders earlier this month, when it was able to auction only two of 14 blocks in a pivotal oil and gas tender.

He signaled that the government will relax its requirement that consortia bidding on oil parcels must have one member act as a guarantor and hold shareholder equity of at least $6 billion to protect the state’s interest in the event of a major accident.

“We are revising the issue of the guarantees,” said Joaquin Coldwell in a Tuesday night interview with top Mexican broadcaster Televisa’s cable news channel Foro TV.

He also said the government would tweak rules prohibiting a consortium from selecting a new company to replace a pre-selected operator that pulls out. He said that rule thwarted bids in this month’s auction.

He said the government will also allow companies to make a second bid in auctions if an initial bid fails to meet a government set minimum.

http://www.reuters.com/article/2015/07/29/mexico-oil-idUSL1N1091B720150729