Mexico Battles Bad Timing in 1st Sale of Oil Fields Since 1930s
(Bloomberg) -- Mexico waited 77 years to invite foreign oil producers back into its borders. That was one year too many.
The move to lure tens of billions of dollars from the likes of Exxon Mobil Corp. will be put to the test for the first time at an oilfield auction on Wednesday. With oil prices down by about half since last year, five of 38 potential bidders, including Glencore Plc, Noble Energy Inc. and even Mexico’s state-owned oil producer, have pulled out.
President Enrique Pena Nieto moved to end the state monopoly after poor drilling infrastructure and technology failed to reverse a decade-long production decline that reduced government revenue. To lure investments now, Mexico will probably get a much smaller share of profits than it would have a year ago.
“They shaped expectation at a $100-per-barrel market and we are way off that now,” Wilbur Matthews, chief executive officer of San Antonio-based Vaquero Global Investment, which oversees more than $100 million of assets including oil-producer bonds, said by phone July 10.
Benchmark U.S. crude is trading at about $52 a barrel and Mexico’s Maya for about $51, about half the prices in June of last year. The meltdown has led producers to cut more than 100,000 jobs globally and reduce spending by more than $100 billion.
This means that Mexico will have to compete for limited global investments with rival producing countries such as Brazil and Colombia, which opened their oil industries years earlier, said David Enriquez, a Mexico-city based partner at energy consultant Goodrich Riquelme & Asociados AC.
“The cost of the uncertainty for new companies entering an unknown environment should be discounted,” he said in an interview at his office on July 6. “Mexico is the new kid on the block.”
View Full Article
WHAT DO YOU THINK?
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.
Operates 15 Offshore Rigs
- ExxonMobil Reports Papua New Guinea Discovery (Jan 16)
- Exxon, BP Targeted in NYC Suit That Relies on 'Nuisance' Theory (Jan 10)
- ExxonMobil Reports More Offshore Guyana Success (Jan 05)
Company: Pemex more info
Operates 45 Offshore Rigs
- Mexico Says Deepwater Oil Tender Doomed By Brazil Competition (Dec 08)
- Sources: Mexico's Pemex Declares Force Majeure On Isthmus Crude Oil (Nov 29)
- Mexico's Pemex Makes Biggest Onshore Oil Find in 15 Years - President (Nov 03)