Mexico to postpone deep water auction, adjust next oil tender terms

Gas is flared from a tower on an oil drilling rig operated by Pemex off the coast of Ciudad del Carmen last year. (Susana Gonzalez/Bloomberg)
Gas is flared from a tower on an oil drilling rig operated by Pemex off the coast of Ciudad del Carmen last year. (Susana Gonzalez/Bloomberg)

By David Alire Garcia / Reuters

Mexico, which has started to open its nationalized oil industry to additional private investment, will postpone auctions for deep-water oil exploration and production contracts and adjust the terms of upcoming tenders after an inaugural oil auction failed to meet the government’s modest expectations.

Energy Minister Pedro Joaquin Coldwell told local television the government will change rules that scared off potential bidders earlier this month, when it was able to auction only two of 14 blocks in a pivotal oil and gas tender.

He signaled that the government will relax its requirement that consortia bidding on oil parcels must have one member act as a guarantor and hold shareholder equity of at least $6 billion to protect the state’s interest in the event of a major accident.

“We are revising the issue of the guarantees,” said Joaquin Coldwell in a Tuesday night interview with top Mexican broadcaster Televisa’s cable news channel Foro TV.

He also said the government would tweak rules prohibiting a consortium from selecting a new company to replace a pre-selected operator that pulls out. He said that rule thwarted bids in this month’s auction.

He said the government will also allow companies to make a second bid in auctions if an initial bid fails to meet a government set minimum.

http://www.reuters.com/article/2015/07/29/mexico-oil-idUSL1N1091B720150729

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