Mexico's Round One to Attract Smaller Players

The relatively small size of opportunities offered in the next phase of Mexico’s Round One means that smaller, equity-backed private exploration and production firms or Colombian and Canadian junior firms will likely be the main bidders, Research Director of Latin America Upstream Oil and Gas Ivan Cima, told Rigzone.

Mexico’s Comission Nacional de Hydrocarburos estimates that overall production from the fields could be 35,000 barrels per day of oil, and production level that will not interest major oil companies, said Cima. Geopark, Gran Tiera and Pacific Rubiales are some of the companies that will likely participate in bidding.

Twenty-six onshore conventional fields in the Burgos, Tampico-Misantla and Salinas-Sureste basins are being offered in the next phase of Round One.

Unlike the previous two rounds, this round will use a license contract with bidding variables, including additional royalty and work commitment. The regime has the potential to be very attractive, although it will ultimately depend on the minimum acceptable bid level that will be announced at a future date, Wood Mackenzie said in a May 19 press statement.

“Overall, this round could be very attractive for smaller players, but it will not lift Mexico’s oil production significantly,” said Pablo Medina, research analyst at Wood Mackenzie, in the statement. “If the objective is to allow Mexican companies to be part of the new energy landscape by offering small fields and flexible pre-qualification criteria, then it could be a success,” said Medina. “If the objective is to attract a diversity of larger international companies with expertise in mature fields, then the round could fall short of expectations.”

The key opportunities for companies looking for sizeable onshore fields will be the migrated service contracts and joint ventures with state energy company Petroleos Mexicanos (PEMEX). The round also could give smaller companies a chance to develop their expertise in Mexico while being able to obtain attractive returns.

The lack of big opportunities suggest that PEMEX may not have relinquished a large number of high potential fields in Round Zero. Given what’s going on with oil prices planned spending cuts by PEMEX, Cima said it wouldn’t be surprising if PEMEX had to relinquish more fields.


Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.