Petrofac confirmed Tuesday that Petróleos Mexicanos (Pemex) has declared that it is the selected bidder for the integrated production service contract to develop the Arenque contract area, offshore Mexico.
The Arenque contract area is situated in the Gulf of Mexico, 19 miles (30 kilometers) from the city of Tampico. The Arenque field, which is currently producing around 5,000 barrels per day, has initial oil in place of approximately 1.2 billion barrels with a current recovery factor of around 11 percent. Under the contract, which runs for 30 years, Petrofac plans to improve the recovery factor and increase production from the core area of the field using horizontal wells and secondary recovery techniques. In addition there is considerable upside potential in the rest of the block. Petrofac will receive a tariff of $7.90 for each barrel of incremental production and will be reimbursed for 75 percent of its development expenditure through a cost recovery mechanism. In the first two years, Petrofac will commit approximately $50 million in capital expenditure.
Under the bidding guidelines stipulated by Pemex, the contract will generate an estimated backlog figure of $0.5 billion.
This is the fourth integrated production service contract that Petrofac has been awarded in Mexico since August last year and confirms Petrofac's commitment to the country. The other contracts are for the Magallanes and Santuario fields in Tabasco State, and the Pánuco field in Veracruz State.
"We are delighted to have been awarded the Arenque contract, which further strengthens our relationship with Pemex and the commitment we have to Mexico to assist in the development of its oil and gas reserves. As well as today's announcement we are also very pleased with the strong start we have made to field operations on Magallanes and Santuario, and the award with Schlumberger of the Pánuco contract," Chief Executive of Petrofac Integrated Energy Services Andy Inglis commented.
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