El Universal – Mining, infrastructure and transport giant Grupo Mexico is looking for partners for the second oil extraction tender, which will auction off nine fields in shallow waters of the Gulf of Mexico.
Bloomberg – Mexico began its annual program to lock in oil sales for the coming year as a shield against a further drop in prices, three people with direct knowledge said.
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.
Sentido Comun – State oil company Petroleos Mexicanos will supply six million barrels of oil to Isthmus Japanese refiner JX Nippon Oil & Energy in six shipments between August and January 2016.
CNBC – Mexico made headlines and earned praise from environmentalists this year when it pledged to cap and cut carbon emissions. Less discussed has been how Mexico may use U.S. natural gas to help it get there.
Bloomberg – Sierra Oil & Gas, poised to become Mexico’s first private crude producer in seven decades, has never drilled a well. What it does have going for itself is money — from New York financiers, a co-owner of the Houston Astros and a Mexican firm being bought by BlackRock Inc.
With Sierra, the only winning bidder in the first oilfield auction since the country scrapped a state monopoly, Mexico gets exactly what it was looking for: an infusion of foreign capital to help reverse a 10-year decline in crude output.
Economic Times – ONGC Videsh lost out on its bid for two oil blocks in Mexico’s first licensing round. The company was the sole bidder for Area 6 and 12 but the bids were rejected as too low.
Energy Voice – EMGS (Electrogmagnetic Geoservices) has been given 5-year approval to acquire more than 80,000 sq km of 3D electromagnetic data in Mexico. The work will be conducted in the Salina de Itsmo basin which is thought to have attractive reservoir opportunities.
El Universal – Finance Minister Luis Videgaray acknowledged that the first shallow-water drilling tender was below expectation, but he praised the process and said the allocations are an initial step in the right direction.
NSSOaxaca – Leftist politician Andres Manuel Lopez Obrador said one of the “beneficiaries” of the first Round One tender is a brother of former President Carlos Salinas de Gortari. He said the first two oil blocks were awarded to a company that, until a month ago, was owned by Jerome Mark Gerard, who is brother of Salinas de Gortari.
Milenio – The president of the National Hydrocarbons Commission, Juan Carlos Zepeda, said that despite falling short in Mexico’s first auction of shallow-water oil tracts, he has “good expectations” for the second stage of tenders on Sept. 30.
El Financiero – Speaking in Paris, President Enrique Peña Nieto, referring to the disappointing first tender of Round One, said the ongoing auctions to allow private enterprises into the energy sector are a learning process.
CNNExpansion – The first phase to explore hydrocarbons in Mexico generated little appetite among oil companies; analysts expect less risk and greater commercial appeal in future tenders. Three main factors explain the low participation of companies.
By Adam Williams, Andrea Navarro and Eric Martin /Bloomberg
Mexico’s first auction of offshore oil leases fell short of the country’s expectations as several majors decided not to participate and only two of 14 blocks received qualifying bids.
Exxon Mobil Corp., Chevron Corp. and Total passed on the 14 shallow-water oil blocks auctioned by Mexico Wednesday in the country’s first-ever sale of territory in the Gulf of Mexico, 77 years after seizing energy assets.
The 14 percent success rate was less than half the 30 percent to 50 percent goal that the government said would be its minimum for judging the auction a success.
The auction was the first in a series that will help determine whether Mexico can reverse a decade-long decline in crude output and fulfill President Enrique Pena Nieto’s pledge to double the pace of economic expansion. The output drop and an almost 50 percent plunge in oil prices during the past year had already forced Mexico to trim government spending and sweeten the auction-contract terms for prospective bidders.
“This has to be crushingly disappointing for the government,” Duncan Wood, director of the Mexico Institute at the Woodrow Wilson International Center for Scholars in Washington, said. “It has to be seen as a very clear message that they need to do a lot more to make the oil and gas opening a success.”
By Laurence Iliff / Wall Street Journal
Former Mexican finance minister Pedro Aspe has an unusual collection on the walls of his offices here: stock and bond certificates from some of the Mexican oil companies that existed before the industry was nationalized in 1938, creating the monopoly Petróleos Mexicanos.
“Many of these companies were subsidiaries of foreign capital, but there was a Mexican oil industry too. And that’s what we want to recreate,” said Aspe, a senior managing director of Evercore Partners Inc. and head of the U.S. investment-banking advisory firm’s Mexican unit.
Now, as Mexico opens its oil industry to competition for the first time in nearly 80 years, Aspe is one of several Mexican businessmen who have financed or helped create homegrown oil companies.
The new companies hope to compete not only with Pemex, but also with global giants like Exxon Mobil Corp. and Royal Dutch Shell PLC.
Mexico plans to hold three auctions of oil blocks this year—the first is Wednesday for 14 exploratory oil blocks in the Gulf of Mexico. The maiden auction is symbolically important to see if the oil companies are on the same page as the government on what the blocks are worth. The National Hydrocarbons Commission hopes to award at least four or five blocks.
For the moment, the fledging oil companies, including one controlled by billionaire Carlos Slim, will need the help of foreign partners in areas like offshore exploration and production, which is more complex than drilling onshore.
A few years from now, however, they could become significant players, much as they were a century ago.
By Adam Williams and Juan Pablo Spinetto / Bloomberg
Mexico waited 77 years to invite foreign oil producers back into its borders. That was one year too many.
The move to lure tens of billions of dollars from the likes of Exxon Mobil Corp. will be put to the test for the first time at an oilfield auction on Wednesday. With oil prices down by about half since last year, five of 38 potential bidders including Glencore, Noble Energy and even Mexico’s state-owned oil producer have pulled out.
President Enrique Pena Nieto moved to end the state monopoly after poor drilling infrastructure and technology failed to reverse a decade-long production decline that reduced government revenue.
To lure investments now, Mexico will probably get a much smaller share of profits than it would have a year ago.
“They shaped expectations at a $100-per-barrel market and we are way off that now,” Wilbur Matthews, chief executive officer of San Antonio-based Vaquero Global Investment.
Bloomberg – Enel Green Power, the publicly traded renewables unit of Italy’s Enel, is investing $220 million in a 100-megawatt wind farm in Zacatecas that’s expected to begin operating in the second half of next year.
El Universal – “The federal government will not squander the oil resources of the nation” in the bid for the first tender of 14 blocks that will be held tomorrow, said the head of the Ministry of Energy, Pedro Joaquin Coldwell.
Bloomberg – Pemex withdrew from the country’s first license auction of 14 oil blocks to focus on the upcoming farm outs. It was dissuaded from bidding after falling oil prices crimped earnings.
Reuters – Mexico’s Energy Minister Pedro Joaquin Coldwell said on Wednesday that awarding just 30 to 50 percent of the 14 contracts up for tender as part of the first phase of a so-called Round One oil auction would be acceptable.