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

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