En Español



Very usefull links



PW
Bookstore





Institutional
links


OPEC
\





 




PW
Business Partners

 


IRAQ OIL THE FORUM

 


Blogspots

FxHQ Forex News

The Global Barrel

Tiempo Cultural

Gustavo Coronel

Iran Watch.org

Le Blog des
Energies Nouvelles

News Links

AP

AFP

Aljazeera

Dow Jones

Reuters


Bloomberg

Views and News
from
Norway

 

 


Editorial/Opinion

 

 

Gaurav Sharma: Mexico's oil and gas licensing
'Round One' finally picks up pace


Mexico succeded in second oil auction with three blocks awarded
even do the majors did not enter the process

 

International and domestic private sector participants were designated catalysts for rejuvenating Mexico's oil and gas sector, after the country tore-up constitutional impediments – dating as far back as 1938 – barring their participation.

Craving foreign direct investment, President Enrique Peña Nieto promised wholesale reform and renewed optimism in August 2014. Welcoming international players to a sector that was off limits for them in Mexico and curbing the clout of state-owned behemoth Petroleos Mexicanos or Pemex was the order of the day.

After Pemex walked away with most of the so-called “Round Zero”, phase I of “Round One” was the one to watch out for private sector challengers. True to form, some 30 international oil and gas companies expressed interest, with anecdotal evidence pointing to mounting regional interest as well. The President's promise held firm despite the oil price decline, with policymakers, corporate advisers and analysts voicing a sense of hope when I reported on the subject for Forbes from Mexico City earlier in March .

Blame it on a high bid /ask threshold differential, oil price volatility or simply a country's inexperience in managing the process at an extraordinary time for the sector – the much touted initial phase did not match the hype. Only 18 companies and seven consortia turned up with none of the oil majors in the room on decision day of 15 July 2015.

Eventually, nine decided to bid, of which seven actually did so and only two bids (Block 2 and Block 7) met the Mexican Government's threshold price. When the dust settled, a mere 14% of the exploration areas on offer had received bids. By all accounts, that was a very poor showing compared to the historic first oil and gas licensing rounds of regional peers Colombia and Brazil, even if we agree that sector headwinds conspired against Mexico.

However, what has happened since leaves room for optimism as the government moved to ease bidding terms and conditions, Lourdes Melgar, Deputy Secretary of Energy in Mexico, told the IRN Oil & Gas International Licensing Summit 2015 in London.

Overtures included an unveiling of the government's minimum threshold two weeks before its latest award of exploration rights on 30 September. The end result was a complete reversal of the events of July, as the auction comprising of nine Gulf of Mexico blocks split into five production sharing agreements saw three winning bids.

BP-controlled Pan American Energy, Italy's Eni, Argentina's E&P Hidrocarburos y Servicios, US independent Fieldwood and domestic player Petrobal were in the winners mix much to the delight of the country's finance ministry

“The process is now about balancing risk and return as we go past the initial stages of liberalization of the sector. Mexico is seeing diversity in terms of industry participants who are coming forward,” Melgar said, promising the country would continue with the opening up of further oil and gas exploration blocks at pace.

Bidding for 25 mature onshore fields in Nuevo Leon, Tamaulipas, Veracruz, Tabasco and Chiapas areas is on the horizon. As is deepwater offshore exploration in Perdido and Salina Basin prospects, with the latter being an extra heavy oil play.

The Deputy Secretary of Energy said her country expects production from the awarded phase II fields to commence by the fourth quarter of 2018. While total estimates for the five blocks comes up to 355 million barrels of oil equivalent (boe), peak output is likely to be in the 85,000 to 90,000 boe per day range.

Overall, the successful phase II bids even make out the first foray to be an initial lesson in licensing, rather than the failure

Big question is where from here? “Onwards and upwards,” said Melgar adding that the Mexican government would lead the country's oil and gas sector towards “profound change” in breaking the absolute monopoly of state-owned Pemex.

“Furthermore, the government has issued a five-year plan for exploration and production with sustainability at the forefront of all considerations and industry-wide consultation. The word ‘sustainability' was exclusively inserted in our framework for constitutional change .”

Melgar also promised “unprecedented levels of transparency” in terms of bidding processes and procedures, as well as derived incomes and proceeds of the oil and gas bids, to garner “public, corporate and institutional investor” confidence.

In March there was hope , July saw disappointment, and September was marked by optimism tinged with relief. Mexico's licensing journey from here on might have all to do with realism and managing expectations at a precarious time for the oil and gas business.

 

Gaurav Sharma, is UK based financial writer covering oil and gas and oil & gas sector analyst with over 15 years of experience in the financial and trade press. Is the author of the Oilholics Synonymous Report. (@The_Oilholic ). Petroleumworld reprint this article in the interest of our readers.

This commentary was published by Forbes, October 10, 2015. Petroleumworld reprint this article in the interest of our readers.

All comments posted and published on Petroleumworld, do not reflect either for or against the opinion expressed in the comment as an endorsement of Petroleumworld. All comments expressed are private comments and do not necessary reflect the view of this website. All comments are posted and published without liability to Petroleumworld.

Use Notice:This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of environmental and humanitarian significance. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml.

All works published by Petroleumworld are in accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.Petroleumworld has no affiliation whatsoever with the originator of this article nor is Petroleumworld endorsed or sponsored by theoriginator.

Petroleumworld encourages persons to reproduce, reprint, or broadcast Petroleumworld articles provided that any such reproduction identify the original source, http://www.petroleumworld.com or else and it is done within the fair use as provided for in section 107 of the US Copyright Law.

If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner. Internet web links to http://www.petroleumworld.com are appreciated

Copyright© 1999-2009 Petroleumworld or respective author or news agency. All rights reserved.

We welcome the use of Petroleumworld™ stories by anyone provided it mentions Petroleumworld.com as the source. Other stories you have to get authorization by its authors.Internet web links to http://www.petroleumworld.com are appreciated

Petroleumworld welcomes your feedback and comments,
share your thoughts on this article, your feed. back is important to us!

Petroleumworld News 10/12/2015

 

We invite all our readers to share with us
their views and comments about this article.
Follow us in : twitter / Facebook
Send this story to a friend Write to editor@petroleumworld.comBy using this link, you agree to allow PW
to publish your comments on our letters page.

Any question or suggestions,
please write to: editor@petroleumworld.com

Best Viewed with IE 5.01+ Windows NT 4.0, '95,
'98,ME,XP, Vista, Windows 7,8 +/ 800x600 pixels



 

 


 

 


February, 2016
Cartagena, Colombia

TOP

Editor & Publisher:Elio Ohep F./Contact Email: editor@petroleumworld.com

Contact:
editor@petroleumworld.com/ phone: Office (58 212) 635 7252,
or Cel (58 412) 996 3730 / (58 414) 276 3041 / (58  412) 952 5301


CopyRight © 1999-2010, Elio Ohep F.- All Rights Reserved. Legal Information

- CCS Office Tele
phone/Teléfonos Oficina: (58 212) 635 7252

PW in Top 100 Energy Sites


Technorati Profile


CopyRight © 1999-2010, Elio Ohep F. - All Rights Reserved.
This material may not be published, broadcast, posted online, rewritten or redistributed by any type of means, except with permission of the author/s

The information in this web site is proprietary and is protected under United States and International Copyright and Trademark laws. No part of this web site may be reproduced or transmitted in any form by any means whatsoever, except with permission of the author/s..

Petroleumworld encourages persons to reproduce, reprint, or broadcast Petroleumworld articles provided that any such reproduction identify the original source, http://www.petroleumworld.com or else and it is done within the fair use as provided for in section 107 of the US Copyright Law. If you wish to use copyrighted material from this site for purposes of your own that go beyond
'fair use', you must obtain permission from the copyright owner.
Any use of this site or its material, in any form, without the express prior written consent of the author, is prohibited by law and is subject to legal action. Legal Information

Top 100+

Technorati Profile
Fair use notice of copyrighted material:

This site is a public free site and it contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.We are making such material available in our efforts to advance understanding of business, environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have chosen to view the included information for research, information, and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from Petroleumworld or the copyright owner of the material.