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.”