Mexico Battles Bad Timing in 1st Sale of Oil Fields Since 1930s
In the first attempt to bring foreign producers back into the country since the industry’s nationalization in 1938, Mexico will offer exploration rights to 14 shallow-water blocks to bidders including Exxon and France’s Total SA.
The day of the auction, the government will disclose the minimum percentage of profits it will keep on each contract. The producers who offer the government the highest returns win.
Government’s Cut
“We have estimated that receiving bids on 30 to 50 percent of the 14 fields would be a very acceptable range,” Energy Minister Pedro Joaquin Coldwell said Monday in Mexico City.
The government will probably request a take of less than 50 percent on the contracts, Tim Samples, a law professor and Mexican-energy analyst at the University of Georgia in Athens, said by phone.
The first blocks being auctioned are estimated to contain a combined production capacity of as much as 80,000 barrels a day, according to Mexico’s energy ministry. Mexico was displaced last year by Brazil as Latin America’s largest crude producer, with output of 2.8 million barrels a day of oil and other liquids, according to U.S. Energy Information Administration data.
Mexico’s national oil company Petroleos Mexicanos, or Pemex, withdrew from the race a week before the auction to conserve cash and focus on bringing in partners for its existing operations. Pemex’s oil production has fallen by more than 1 million barrels a day over the past decade.
No Explanation
Other interested parties such as Glencore, Noble, PTT Exploration & Production PCL and Ecopetrol SA also pulled out, without saying why.
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