Pemex Declares Ricos MSC Tender Void Due to Lack of Bids

Mexico's state oil company Pemex has scrapped a tender for a multiple service contract (MSC) on the Ricos block in the Burgos basin after none of the five companies that acquired bidding rules presented bids, Pemex said in a statement.

Bids were due February 8 and the deadline for purchasing bidding rules was February 2.

Pemex is holding meetings with the potential bidders to receive feedback, examine technical information, reevaluate the Ricos program and determine the best time to launch another tender for the block.

This is the second time Ricos has failed to attract bids, as it was also offered in Pemex's first MSC round in 2003. The reason, according to oil analyst Alejandra León, is that these MSCs, under which third-party companies can work with Pemex to explore and drill for gas but cannot book reserves, are simply not worthwhile. "The contracts, since the beginning, have not been very attractive," León, an analyst in the Mexico City office of Boston-based Cambridge Energy Research Associates (CERA), told BNamericas, adding, "They are service contracts only, there are not many options."

Pemex has had difficulty generating interest from foreign companies in MSCs because "they don't earn much return," León said, adding, "There are other places in the world where they [foreign oil and gas companies] can do better business."

All the MSC contracts offered so far are in the Burgos basin in northern Tamaulipas and Nuevo León states. The companies that bought bidding rules for Ricos were Monterrey Services and Technology, Dowell Schlumberger de México, Naves Industriales de Nuevo Laredo, Servicios y Abastecimientos Industriales Mexicanos, and Itera International Energy Corporation, Pemex said.

Pemex has awarded six contracts to date in the first and second MSC rounds, including five of seven blocks offered in the first round. Many of the companies that bid on the contracts are Mexican. The second MSC round, launched in July 2004, included four blocks: Pandura-Anáhuac, Ricos, Monclova and Pirineo. Pemex awarded the Pandura-Anáhuac block to a local consortium made up of Industrial Perforadora de Campeche and Compañía de Desarrollo de Servicios Petroleros in November last year. Contracts on the two outstanding blocks - Monclova and Pirineo - will be awarded February 15 and 22 respectively, the statement said.

Pemex is also considering offering MSCs for the development of the mountainous Chicontepec field straddling Veracruz and Puebla states, but "It's going to be much more difficult [than the Burgos basin]," León said.

The contracts would present the same problems and barriers as the Burgos MSCs, only they would be even less worth it for companies, she said. Nevertheless, Pemex exploration and production (PEP) projects MSCs to increase national natural gas production by 535 million cubic feet per day (mcf/d) with a corresponding drop in imports. The company hopes to attract total investment of about US$5.24bn and new technologies that will increase PEP's operational capacity and save about US$900mn, the statement said.

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