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Mexico awarded 19 deep-water oil blocks, Shell dominates biggest-yet bidding round



Shell wins rights to develop nine blocks auctioned Wednesday. 19 of Mexico's 29 deep-water oil blocks receive winning bids

By Adam Williams

MEXICO CITY
Petroleumworld 02 01 2018

In the span of a few hours, Royal Dutch Shell Plc became the new king of Mexico's deep waters.

The super major -- which once dominated the country's oil industry and operates the deepest prospects in the U.S. side of the Gulf -- made a comeback by winning about a third of the offerings in Mexico's biggest-yet bidding round.

The auction of exploration and production permits on Wednesday was the strongest sign so far that Mexican President Enrique Pena Nieto's energy reform is bearing fruit by luring investment plans that will help get Mexico's oil production back on track.

“Mexico is having, thank God, much success attracting investment from national and foreign oil companies,” oil commissioner Juan Carlos Zepeda said after the auction. “This is being achieved with very good financial terms for the Mexican government.”

The Latin American nation is touting its riches to bring Big Oil's billions back eight decades after seizing assets from Shell and Standard Oil Co. of California, the remnant of the John D. Rockefeller empire that later became Chevron Corp. A unit of Shell was responsible for more than 60 percent of the country's production before the 1938 expropriation of foreign assets, according to a government website .

Under state-owned Petroleos Mexicanos , which held a monopoly until a 2013 reform, production in the country has dwindled year after year. Meanwhile, on the other side of the maritime border with the U.S., Shell's Stones and Perdido prospects are the world's two deepest offshore projects, according to the company's website.

In Wednesday's bidding round, Shell won rights to nine of the 29 prime Gulf of Mexico tracts offered near the U.S. side where the company is already active. The Hague-based producer nabbed four areas in the Salina basin as a lone bidder, four in the Perdido area in a partnership with Qatar Petroleum, plus one with Pemex.

“We commend Mexico on a historical, successful bid round,” Andy Brown, upstream director at Shell, said in an emailed statement. “The proximity and technical similarity of this opportunity to our leading position in the U.S. Gulf of Mexico will allow us to benefit from and build upon decades of experience, complementing our position in the region.”

Downhill Slide

Mexico's production has declined under a state monopoly

Source: Pemex

Chevron, Italy's Eni SpA and a unit of Petroliam Nasional Bhd also won their share of rights. If the areas are successfully developed over the life of the contracts, they could add as much as 1.5 million barrels of daily crude production, nearly doubling the country's current rate, and require investment of as much to $93 billion, according to Deputy Energy Minister Aldo Flores.

The government expects to receive more than 64 percent of the profits earned from the contracts, Zepeda said. First production is forecast to start by 2028. Mexico's deep waters are estimated to hold 28 billion barrels of prospective reserves, according to the country's oil regulator.

Shell, which won rights to develop a shallow-water area with Total SA last year, also opened gasoline stations throughout Mexico in 2017. The company's country chief, Alberto de la Fuente, said at the time that the company will invest at least $1 billion in fuel stations alone over the next 10 years in Mexico.

Story by Adam Williams from Bloomberg.

DETAIL RESULTS:

Here are details of the fields on offer, the companies who bid for or won them, along with areas that did not receive bids.

 

PERDIDO AREA:

- Block 1 is located in the Perdido Fold Belt and covers some 768 square miles (1,988 sq km). It contains an estimated 171 million barrels of crude oil equivalent in prospective resources.

RESULTS: No bidders.

- Block 2 is located in the Perdido Fold Belt and covers some 829 square miles (2,146 sq km). It contains an estimated 76 million barrels of crude oil equivalent in prospective resources.

RESULTS:

Winning bidder: Shell, Pemex consortium

Losing bidders: China Offshore

- Block 3 is located in the Perdido Fold Belt and covers some 796 square miles (2,062 sq km). It contains an estimated 115 million barrels of crude oil equivalent in prospective resources.

RESULTS:

Winning bidder: Shell, Qatar Petroleum consortium

- Block 4 is located in the Perdido Fold Belt and covers some 734 square miles (1,900 sq km). It contains an estimated 40 million barrels of crude oil equivalent in prospective resources.

RESULTS:

Winning bidder: Shell, Qatar Petroleum consortium

- Block 5 is located in the Perdido Fold Belt and covers some 1,055 square miles (2,733 sq km). It contains an estimated 252 million barrels of crude oil equivalent in prospective resources.

RESULTS:

Winning bidder: Pemex

- Block 6 is located in the Perdido Fold Belt and covers some 730 square miles (1,891 sq km). It contains an estimated 171 million barrels of crude oil equivalent in prospective resources.

RESULTS:

Winning bidder: Shell, Qatar Petroleum

- Block 7 is located in the Perdido Fold Belt and covers some 760 square miles (1,968 sq km). It contains an estimated 17 million barrels of crude oil equivalent in prospective resources.

RESULTS: No bidders

- Block 8 is located in the Perdido Fold Belt and covers some 796 square miles (2,062 sq km). It contains an estimated 13 million barrels of crude oil equivalent in prospective resources.

RESULTS: No bidders

- Block 9 is located in the Perdido Fold Belt and covers some 776 square miles (2,009 sq km). It contains an estimated 92 million barrels of crude oil equivalent in prospective resources.

RESULTS: No bidders

 

CORDILLERAS MEXICANAS AREA:

- Block 10 is located in thec basin and covers some 772 square miles (1,999 sq km). It contains an estimated 100 million barrels of crude oil equivalent in prospective resources.

RESULTS:

Winning bidder: Repsol, PC Carigali, Ophir consortium

- Block 11 is located in the Cordilleras Mexicanas basin and covers some 773 square miles (2,002 sq km). It contains an estimated 182 million barrels of crude oil equivalent in prospective resources.

RESULTS: No bidders

- Block 12 is located in the Cordilleras Mexicanas basin and covers some 1,197 square miles (3,099 sq km). It contains an estimated 215 million barrels of crude oil equivalent in prospective resources.

Winning bidder: PC Carigali, Ophir, PTTEP consortium

- Block 13 is located in the Cordilleras Mexicanas basin and covers some 759 square miles (1,967 sq km). It contains an estimated 179 million barrels of crude oil equivalent in prospective resources.

RESULTS: No bidders

- Block 14 is located in the Cordilleras Mexicanas basin and covers some 866 square miles (2,242 sq km). It contains an estimated 180 million barrels of crude oil equivalent in prospective resources.

RESULTS:

Winning bid: Repsol, PC Carigali consortium

- Block 15 is located in the Cordilleras Mexicanas basin and covers some 788 square miles (2,042 sq km). It contains an estimated 180 million barrels of crude oil equivalent in prospective resources.

RESULTS: No bidders

- Block 16 is located in the Cordilleras Mexicanas basin and covers some 790 square miles (2,047 sq km). It contains an estimated 131 million barrels of crude oil equivalent in prospective resources.

RESULTS: No bidders

- Block 17 is located in the Cordilleras Mexicanas basin and covers some 1,162 square miles (3,010 sq km). It contains an estimated 131 million barrels of crude oil equivalent in prospective resources.

RESULTS: No bidders

- Block 18 is located in the Cordilleras Mexicanas basin and covers some 1,126 square miles (2,917 sq km). It contains an estimated 412 million barrels of crude oil equivalent in prospective resources.

RESULTS: No bidders

- Block 19 is located in the Cordilleras Mexicanas basin and covers some 1,160 square miles (3,003 sq km). It contains an estimated 281 million barrels of crude oil equivalent in prospective resources.

RESULTS: No bidders

 

CUENCA SALINAS :

- Block 20 is located in the Salina basin and covers some 803 square miles (2,080 sq km). It contains an estimated 199 million barrels of crude oil equivalent in prospective resources.

RESULTS:

Winning bidder: Royal Dutch Shell

Losing bidder: Pemex

- Block 21 is located in the Salina basin and covers some 784 square miles (2,030 sq km). It contains an estimated 327 million barrels of crude oil equivalent in prospective resources.

RESULTS:

Winning bidder: Royal Dutch Shell

Losing bidders: BP, Statoil, Total consortium

Chevron, Pemex, ONGC consortium

- Block 22 is located in the Salina basin and covers some 1,112 square miles (2,879 sq km). It contains an estimated 101 million barrels of crude oil equivalent in prospective resources.

RESULTS:

Winning bidder: Chevron, Pemex, Inpex consortium

Losing bidder: BHP Billiton

- Block 23 is located in the Salina basin and covers some 715 square miles (1,853 sq km). It contains an estimated 131 million barrels of crude oil equivalent in prospective resources.

RESULTS:

Winning bidder: Royal Dutch Shell

Losing bidder: Chevron, Pemex, Inpex consortium

- Block 24 is located in the Salina basin and covers some 742 square miles (1,922 sq km). It contains an estimated 100 million barrels of crude oil equivalent in prospective resources.

RESULTS:

Winning bidder: ENI, Qatar Petroleum consortium

- Block 25 is located in the Salina basin and covers some 814 square miles (2,107 sq km). It contains an estimated 12 million barrels of crude oil equivalent in prospective resources.

RESULTS:

Winning bidder: PC Carigali

- Block 26 is located in the Salina basin and covers some 784 square miles (2,030 sq km). It contains an estimated 67 million barrels of crude oil equivalent in prospective resources.

RESULTS:

Winning bidder: PC Carigali

Losing bidders: BP, Statoil

Royal Dutch Shell

- Block 27 is located in the Salina basin and covers some 818 square miles (2,118 sq km). It contains an estimated 68 million barrels of crude oil equivalent in prospective resources.

RESULTS: No bidders

- Block 28 is located in the Salina basin and covers some 1,184 square miles (3,067 sq km). It contains an estimated 106 million barrels of crude oil equivalent in prospective resources.

RESULTS:

Winning bidder: Royal Dutch Shell

Losing bidder: PC Carigali

- Block 29 is located in the Salina basin and covers some 1,256 square miles (3,254 sq km). It contains an estimated 176 million barrels of crude oil equivalent in prospective resources.

RESULTS:

Winning bidder: Repsol, PC Carigali, Sierra, PTTEP consortium

Losing bidders: ENI, Qatar Petroleum, Citla consortium

Pemex, CNOOC consortium

Total, BP, Statoil consortium

Royal Dutch Shell

Data from Mexico's National Hydrocarbons Commission

Reporting by Reuters Mexico Bureau.

 

Story from Petroleumworld. Source: Bloomberg / Reuters.

Petroleumworld.com / 02 01 2018

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