LATAM
México

Guyana

Trinidad
& Tobago




Very usefull links



PW
Bookstore





News links

AP

AFP

Aljazeera

Dow Jones

Oil price

Reuters

Bloomberg

Views and News
from
Norway

 

 

 

Mexico new energy policies is giving Brazil's oil an edge

carbontracker.org

Offshore plaform

- Under Lopez Obrador, new rounds and Pemex partnerships halted

- ‘There is an opportunity cost' for Mexico, analyst says

By Peter Millard and Amy Stillman / Bloomberg

RIO / MEXICO CITY
Petroleumworld 07 10 2019

Mexico 's moratorium on auctioning off its oil riches to foreign producers is giving a leg up to nearby rivals Brazil and Guyana.

Mexico President Andres Manuel Lopez Obrador has halted new bid rounds, and state-owned Petroleos Mexicanos has disappointed potential partners by eschewing deep-water blocks in favor of cheaper-to-produce oil closer to shore. This means latecomers to Mexico's opening will have to buy into existing licenses, or move on to other countries.

Royal Dutch Shell Plc , Malaysia's Petronas , Repsol SA and Total SA were the quickest to pounce before the halt, making it easier for them to find partners hungry for access. However, the moratorium also means fewer wildcatters in Mexico just 20 years away from an expected peak in global oil demand.

“There is an opportunity cost for Mexico keeping its doors closed,” said Pablo Medina, vice president of Welligence Energy Analytics. “Oil and gas companies need to be efficient and they won't keep a big Mexico team for the sake of it.”

In December, days after assuming the presidency, Lopez Obrador said that no new auctions would be held for at least three years because companies must show results from contracts already awarded. Meanwhile, Pemex has resisted handing back dormant blocks in other regions for re-auction, closing off another expansion path for outsiders.

Brazil, which has a deep-water round planned this year, imposed a similar moratorium to Mexico's a decade ago after it discovered fields in a deep-water region known as the pre-salt, seeking time to put state-controlled Petroleo Brasileiro SA in charge of the new frontier.

But Brazil was blindsided by the onset of U.S. shale oil, and missed an opportunity to auction the acreage when prices were above $100 a barrel. Brazil also failed to meet aggressive production targets after delaying development in the region.

“It's important for the government to understand that exploration in deep-water must continue” to reverse production declines and meet a goal of 2.65 million barrels a day by 2024, said Alberto Casquera, an oil analyst at Wood Mackenzie Ltd.

Mexico's Perdido Fold Belt holds an estimated 3.3 billion barrels of oil equivalent in yet-to-find resources, and the country could produce around 1.2 million barrels a day from deep-water resources by 2028, Casquera said. It takes years to go from a discovery to commercial production at these remote projects, and none of the 1.66 million barrels a day Mexico produces are from this region.

More Liberal Response

Private companies have about 70% of the deep-water acreage auctioned in Mexico between 2015 and 2018, while Pemex holds the remainder. Positive exploration results could prompt a more liberal policy response even from Lopez Obrador, said Schreiner Parker, Rystad Energy 's vice president for Latin America.

“Those companies may choose to farm down, so I think there's still a second-hand market for exploration acreage in Mexico. But certainly not an organic rout to that acreage,” said Parker. “The proof will be at the end of the drill bit, and if it turns out that the Mexican Gulf of Mexico has these significant prizes out there, that could change the minds of the government and also the appetite of the international oil companies.”

Landmark Reforms

Mexico's most advanced deep-water project is Trion, a joint-venture between Pemex and BHP Group , which is the operator. BHP is drilling appraisal wells and is expected to start production in late 2024, Wood Mackenzie estimates. Last month, Mexico's National Hydrocarbons Commission approved Shell's plan to explore five deep-water blocks in Mexico, with drilling expected to start before the end of the year.

Oil and politics have been historically intertwined in Mexico. In the aftermath of the Mexican Revolution in the 1920s, Shell and Exxon Mobil Corp. migrated to Venezuela and turned it into the world's top exporter within a decade. Then full expropriation came in 1939, blocking international oil companies from operating in Mexico until the previous administration approved landmark energy reforms in 2014.

“They haven't undone the laws, but they have systematically moved to dismantle the system,” said John Padilla, managing director of IPD Latin America LLC . “This is clearly a net positive for Brazil if they can continue to attract companies looking to add more acreage.”



Story by Peter Millard and Amy Stillman from Bloomberg.

bloomberg.com/ 07 09 2019

________________________


We invite you to join us as a sponsor.

Circulated Videos, Articles, Opinions and Reports which carry your name and brand are used to target Entrepreneurs through our site, promoting your organization’s services. The opportunity is to insert in our stories pages short attention-grabbing videos, or to publish your own feature stories.

________________________

Copyright© 1999-2019 Petroleumworld or respective author or news agency. All rights reserved.

We welcome the use of Petroleumworld™ (PW) 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 feedback is important to us!

We invite all our readers to share with us
their views and comments about this article.

Write to editor@petroleumworld.com

By 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 7,8,10 +/ 800x600 pixels

Twitter: @petroleumworld1


TOP

Contact: editor@petroleumworld.com,

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

CopyRight © 1999-2019, Paul Ohep F. - All Rights Reserved. Legal Information

PW in Top 100 Energy Sites

CopyRight©1999-2019, Petroleumworld ™  / Elio Ohep - All rights reserved

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 fromPetroleumworld or the copyright owner of the material.