In more good news for Mexico's oil industry,Reuters reported last month that PEMEX, which is Mexico's state-owned operator of the nation's oil production resources, has decided to award two of three old-field operating contracts to foreign direct investors for the first time in more than 70 years. The two contracts went to British oil firm Petrofac, while a third contract was awarded to Mexico's domestic Administradora en Proyectos de Campos (APC).
The new foreign investment dollars are expected to infuse Mexico's declining oil sector with new life by tapping into the nearly 40 billion barrels of reserves that are projected to exist within its borders. “This is the beginning of a new phase,” said PEMEX CEO Juan Jose Suarez Coppel. “We want companies to help us exploit this resource by working hand-in-hand with us.”
Mexico is also planning to offer deep-water contracts starting next year, according to Coppel, who reportedly told Reuters,“ With more flexible contracts... the potential is huge.” In addition, Petrofac will be investing more than $500 million in the Santuario,Carrizo and Magallanes fields, which are already producing more than 15,000 barrels of oil each day. Over the next few years, Pemex hopes to raise this number to more than 55,000 barrels per day with the help of the large sum of money they plan to invest.
“We are sure we will be able to significantly increase the recovery of these reserves for the benefit of all Mexicans,” said Carlos Morales, who is the current head of PEMEX upstream operations. In part, Petrofac was chosen to receive the two new contracts from among nearly 30 competitive bidders because they were able to promise the lowest cost of production per barrel, even beating out longtime giants in the industry such as Haliburton, Schlumberger and Repsol.