Mexico Oil Bidders Said to Balk at Guarantees as Auction Looms

Concerns regarding financial requirements were voiced in at least seven comments on the regulator’s online forum.
Concerns regarding financial requirements were voiced in at least seven comments on the regulator’s online forum.

By Adam Williams, Andrea Navarro and Pablo Rosendo Gonzalez / Bloomberg

Some would-be bidders in Mexico’s first oil license auction are resisting guarantee requirements in an impasse that threatens to reduce competition in the country’s energy liberalization, people briefed on the matter said.

Rules require each bidding group to have one partner to act as guarantor, and for that company to maintain shareholder equity, or total assets minus liabilities, of at least $6 billion.

The stipulation of a single guarantor, rather than sharing the burden among partners, is proving prohibitive for some companies, three people said, asking not to be identified because the matter is private.

A consortium consisting of Australia-based Woodside Petroleum, Mexico’s Grupo Diavaz and Argentina’s Pluspetrol is among registered bidders reluctant to proceed, the people said. Spokesmen for all three declined to comment.

Mexico is hoping for $17 billion in private investment in the first of five oil auctions this year as it seeks to turn around a decade-long production slump at state monopoly Petroleos Mexicanos. Nineteen individual companies, including Chevron Corp. and Exxon Mobil Corp., and seven consortia qualified to bid for 14 shallow-water blocks this month.

http://www.bloomberg.com/news/articles/2015-06-26/mexico-oil-bidders-said-to-balk-at-guarantees-as-auction-looms

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