Pemex to Tender 4 MSCs in 2006 Pending Legal Confirmation

Mexico's state oil company Pemex expects investments in four new multiple services contracts (MSCs) to be tendered next year to reach US$1.5bn-1.8bn pending confirmation of their legality, Pemex CEO Luis Ramírez Corzo said in a statement.

These new MSCs, which will be for four natural gas blocks in Tamaulipas, Coahuila and Nuevo León states, would allow Pemex to obtain additional gas production of some 300 million cubic feet a day (Mf3/d), Ramírez said.

Pemex temporarily suspended awarding the contracts in June 2005 due to legal problems as some lawmakers alleged they were unconstitutional.

However, Pemex recently announced it has won nine rulings in four lawsuits related to the legality of the MSCs, clearing the way for the company to resume awarding MSCs for natural gas exploration and production to private companies in 2006.

However, due to ambiguities in the existing legislation leading to varying interpretations, the federal audit office has asked Pemex not to tender new MSC contracts until the law is modified. Pemex plans to restart MSC tenders once it receives the green light from the audit office.

The eight contracts awarded in the first two rounds of MSCs are expected to bring in about US$6.34bn in investment, increase natural gas production by 655Mf3/d, thus decreasing imports, and attract new technologies expected to increase Pemex's efficiency in general.

Pemex produced more than 5 billion cubic feet of natural gas a day in 2005 due to investments made in the last five years in the Burgos and Veracruz basins, Ramírez said.

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