Repsol Wins Service Contract from Pemex

Repsol-YPF presented the sole bid Thursday for the first multiple service contract to produce gas for Pemex.

The bid was for Reynosa-Monterrey, the first of seven blocks of natural gas reserves being tendered for development in the Burgos gas fields of northeastern Mexico.

Pemex is expected to award the contract Thursday, assuming the bid passes technical evaluation and is within the company's price limit.

A Pemex spokeswoman said Total SA and ExxonMobil Corp. were among companies expected to bid, but didn't present proposals Wednesday.

Through the multiple service contracts, Pemex hopes to add 1 billion cubic feet a day of natural gas to its production, which it aims to raise to 6.9 Bcf/d in 2006 from 4.5 Bcf/d at present.

Bids for the remaining blocks in the current round of tenders will be received each Wednesday during the next five weeks. Total investment in the seven blocks is expected to be between $6 billion and $8 billion.

Burgos lies across the U.S. border from Texas' most-productive gas fields. It is Mexico's main non-associated gas-producing region, with current output about 1 Bcf/d.

Repsol-YPF set up an office in Mexico in February to compete for the contracts. The company is already present in Mexico's natural gas market with its 24% stake in Gas Natural SDG SA, which operates several natural gas distribution networks across the country.

Pemex has about a 5% stake in Repsol YPF.