Category Archives: Energy

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

Mexico’s only oil champ, Sierra, is backed by big money

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.

http://www.bloomberg.com/news/articles/2015-07-17/mexico-s-only-oil-champs-backed-by-riverstone-blackrock-money

Carlos Salinas brother said beneficiary of oil auction

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.

http://www.nssoaxaca.com/nacional/250-general/126891-2015-07-17-01-44-58

Mexico Energy Reform Starts With Thud in Offshore Oil Auction

The shallow-water blocks were always going to draw less interest than fields in deeper seas that have yet to be auctioned.
The shallow-water blocks were always going to draw less interest than fields in deeper seas that have yet to be auctioned.

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.”

http://www.bloomberg.com/news/articles/2015-07-15/oil-majors-shun-mexico-offshore-auction-as-blocks-go-unsold

New players line up to compete for a share of Mexico’s oil

Many of the new Mexican oil hopefuls have worked for former oil monopoly Pemex as oil-field services contractors.
Many of the new Mexican oil hopefuls have worked for former oil monopoly Pemex as oil-field services contractors.

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.

http://www.wsj.com/articles/new-oil-players-line-up-to-bid-on-a-piece-of-mexico-1436917689

Mexico battles bad timing in first sale of oil fields since 1930s

Mexico will offer exploration rights to 14 shallow-water blocks to bidders.
Mexico will offer exploration rights to 14 shallow-water blocks to bidders.

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.

http://www.bloomberg.com/news/articles/2015-07-13/mexico-battles-bad-timing-in-1st-sale-of-oil-fields-since-1930s