U.S., Mexico Negotiating Gulf Of Mexico Oil-Drilling Agreement

WASHINGTON (Dow Jones Newswires), Sep. 20, 2011

The U.S. and Mexico are negotiating to develop an agreement for oil-drilling practices in certain areas of the Gulf of Mexico, possibly delaying bids for drilling leases that come up for sale later this year, the U.S. Interior Department said Tuesday.

Formal talks between the two countries started Aug. 30 after Presidents Barack Obama and Felipe Calderon said in May 2010--just days after the Deepwater Horizon drilling rig exploded--that their countries would work toward an agreement to facilitate the safe development of oil and natural gas in waters near both countries.

On Tuesday, the Interior Department said negotiations could delay the processing of bids that companies submit for leases that come up for sale in December. That sale, known as Lease Sale 218, will be the first in the Gulf of Mexico since the oil spill last year.

Of the 3,900 blocks that the U.S. plans to offer for leasing in the western Gulf of Mexico, about 166 lie within three nautical miles of a water border between the U.S. and Mexico and would be subject to the terms of a future agreement. As a result, bids for leases in those areas will not be processed until an agreement is reached or until June 14, 2012--whichever comes first.

If the two countries do not reach an agreement, the Interior Department said it would then decide what to do with bids submitted for leases in those areas.

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