Mexico's Bid Round Hurt by Consortia Restrictions

The restriction on partnership flexibility was one of the major factors that hurt Mexico’s inaugural bidding round for oil and gas explorations rights, according to a presentation made Thursday at a conference in London.

Speaking at the Geological Society's Finding Oil & Gas in Mexico conference, Read Taylor, executive director for upstream Mexico at Sierra Oil and Gas, said the bid round suffered from "a lot of restrictions" on companies that got together in a consortium in order to obtain licenses.

"I was involved in 13 bid rounds in Brazil and we were doing deals for the bid … upstairs in the hotel room while the bid was going on downstairs. You can't do that in Mexico. You sign up months in advance and that's the guy you go to the dance with and you can't change that dance partner. That's the guy you're with, and if you don't like the same blocks, these things break up…Unfortunately what happened was it created a shortlist of companies that survived each other and were able to actually get to the bid round … Good news for us but bad news for the industry."

Sierra Oil and Gas, along with its partners Talos Energy and Premier Oil, was awarded two blocks during the first tender of Mexico's bid round one. The first phase of the auction saw just two of 14 contracts offered to companies.

In his presentation, Taylor also suggested that giving companies access to early 3D seismic data is the key to developing technical excellence and implied that the contracts associated with the bid round were too complex. The next phase of the bid round, which involves nine shallow-water oil fields, will be awarded Sept. 30.


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