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.