Mexico plans deep-water oil auction next year

The deep-water announcement came a day after the National Hydrocarbons Commission, the government’s oil regulator, successfully auctioned off all 25 onshore contracts.
The deep-water announcement came a day after the National Hydrocarbons Commission, the government’s oil regulator, successfully auctioned off all 25 onshore contracts.

By Laurence Iliff / Wall Street Journal

On the heels on this week’s successful auction of 25 onshore blocks with modest oil and gas resources, Mexico’s Energy Ministry on Wednesday announced plans for a highly anticipated tender of deep-water exploration blocks in the Gulf of Mexico, not far from the U.S. side of the waterway.

The ministry said the government’s fourth oil auction since a 2013 energy reform opened up the sector to foreign and private companies will be announced by the third quarter of 2016 and held within 90 days of that announcement. Officials had been promising details on the deep-water auction over the past several weeks, prompting industry speculation on the holdup.

Ten blocks will be offered, the ministry said, including four in the Perdido area of the Gulf near the U.S. maritime boundary.

If commercial quantities of oil and gas are found on the Mexican side, the government would employ a license contract model similar to a concession used in other markets like the U.S. Mexico also allows production-sharing and profit-sharing contracts, although industry generally prefers licenses or concessions because of their relative simplicity to administer.

Missing from the Wednesday announcement, however, was the expected inclusion of heavy-oil projects and other joint ventures with national oil company and former monopoly Petróleos Mexicanos.

http://www.wsj.com/articles/mexico-plans-deep-water-oil-auction-next-year-1450312499

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