(Bloomberg) -- BHP Billiton Ltd. will pay $624 million to be Petroleos Mexicanos’ first private partner in producing oil and natural gas in the deep waters of the Gulf of Mexico.
BHP will partner with Pemex, as the state-owned operator is known, to develop oil in the Trion field. Trion, located just south of the maritime border with the U.S., is estimated to contain the equivalent of about 485 million barrels. The Melbourne-based company beat out BP Plc, which offered $604 million, the National Hydrocarbons Commission announced Monday in Mexico City. Both BHP and BP offered the maximum royalty to the state of four percent.
The joint venture with a private oil producer in the Gulf of Mexico signals the beginning of a new era for Pemex, whose 75-year monopoly in Mexico ended in 2013 when the government approved to open the energy industry to foreign competitors. Pemex hopes joint ventures, such as in the Trion field, will assist to reverse 12 years of oil production declines and 16 consecutive quarterly losses that have left the state-owned giant in its most difficult financial standing in company history.
"It will be the first-time in history that Pemex has a joint venture with risk involved," Jose Antonio Gonzalez Anaya, Pemex’s Chief Executive Officer, said in a Dec. 1 interview with Bloomberg Television. "We expect investment as soon as 2017. We have worked quite a bit on the field and it is a production project. The work can be continued relatively quickly."
BHP brings experience in deep-water fields, as it already operates deep-water fields in the Gulf of Mexico on the U.S., including Shenzi and Neptune that lie more than 100 kilometers off the coast of Louisiana. It also has non-operating interest in other Gulf fields such as Atlantis, Mad Dog and Genesis.
The Trion field, which Anaya estimated will bring in as much as $11 billion in investment for Mexico, is located in the Perdido belt, an area of the Gulf of Mexico that spans the U.S.-Mexico maritime border. The historic joint-venture auction attracted only two bidders, as four other companies --Chevron Corp., Exxon Mobil Corp., Royal Dutch Shell Plc and Total SA -- that qualified as operators did not participate.
Mexico will also auction off 10 blocks today, including four in the Perdido belt and six in a southern gulf area known as the Salina Basin. A total of 17 companies grouped into 15 consortia qualified to bid for the blocks.
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