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Mexico oil and gas rounds on hold, auctions postponed two years

Facebook/Rocio Nahle

Rocio Nahle, incoming energy secretary with president-elect Andres Manuel Lopez Obrador

- Mexico says no new auctions until 2021

By Kathrine Schmidt / Upstream

MEXICO CIY
Petroleumworld 11 22 2018

Mexico's incoming energy secretary Rocio Nahle told a local news outlet this week that the country's new government would not hold oil and gas bid rounds planned for February and would suspend new acreage offerings until 2021 to evaluate the results from areas awarded so far.

While not yet official, such a move had been expected given the deep scepticism of president-elect Andres Manuel Lopez Obrador, who takes office on 1 December, to Mexico's energy reform to open the sector to private companies.

The outgoing administration of Enrique Pena Nieto had planned two onshore bid offerings, Rounds 3.2 and 3.3, for February. There had also been plans for a farm-out process for Pemex to take on new partners at seven clusters of onshore fields.

"We want to give a deadline of two years to be able to evaluate (this). Why? There are many that have said they will take four or five years to be able to develop a well. We are not going to give contracts in February," Nahle said in an interview with El Sol de Mexico.

"They're telling us that some of them will begin producing in 2020, some in 2024, some in 2026. It would be irresponsible to keep giving out big stretches of territory for contract awards without even having an evaluation of results. We have to wait."

Nahle in her discussion with the newspaper did reaffirm the administration's position that existing contracts would be respected.

She also said the administration would, however, push ahead on efforts to build its planned new refinery in Dos Bocas, and would offer a restricted invitation to companies to tender for the project, mentioning contractors such as Bechtel and Fluor.

Nahle also complained about the terms that had been offered by the outgoing government, suggesting that the terms had been too generous and the process had been "too open" and that blocks awarded were much larger than those allotted in the United States.

(The US blocks, at only three square miles, are also unusually small by international standards and companies routinely lease large swathes of them. Especially in less-explored basins, companies prefer larger areas to gain an understanding of regional geology, a piece of feedback from industry that Mexico incorporated into the development of its rounds).

In regard to partnerships between Pemex and private companies, the administration will also watch the farm-out agreements in question to see if results are achieved, Nahle said.

Whether the company wants to enter more such agreements will be its decision, she added.

"Who decides if it continues or not, it's Pemex, because Pemex acts as a business and will see what business goes with partners and which doesn't. But Pemex will determine that, the company itself. Not the government, not me, it's Pemex."

Nahle also rebuffed criticism that the administration had sought to diminish the autonomy of regulators in the oil business, but was also careful to point out that Article 28 of the country's constitution indicates that regulatory bodies are "at the service" of the executive power.

"They will remain autonomous, the law says they will have technical and managerial autonomy," Nahle said.

If there had really been a desire to diminish the autonomy of such bodies, a change to the law of regulatory bodies would have been proposed, she indicated.

Original article

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Story by Kathrine Schmidt from Upstream

upstreamonline.com 11 22 2018

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