Mexico is quickly moving forward with the bidding process for the first contracts following the reform of its energy sector and is expected to announce the fiscal terms in November, followed by contracts for shallow water fields in late April or early May of 2015. Contracts for deep-water fields will be awarded in Sept. and Oct. of next year.
“Mexico is ‘like a sweet shop in the oil business,’ according to one executive,” writes the Financial Times. “As the clock ticks down to the first bidding round for oil and gas fields after nearly 80 years of state control, executives at an international oil conference in the Caribbean resort of Cancun said they were tentatively starting to flesh out their investment plans.”
Mexico will offer contracts for 196 fields in the first round, including 109 for exploration and 60 for production blocks. It’s also important to note that 70 of the 109 exploration blocks also include other resources, such as shale, and the remaining 39 are not yet well explored or not yet explored at all.
All told, the opportunities and immense scale of Mexico’s deep water potential is staggering, since only 57 wells have been drilled on the Mexican side of the Gulf, compared to around 1,600 wells on the U.S. side. Mexico is currently busy making seismic data and the final fiscal terms of the contracts available for outside companies to speed up the process.
According to an article released late last week by the Financial Times,Irish explorer Tullow Oil and Brazil’s largest producer BG Group, along with U.S.-based companies Noble and Occidental, have all expressed serious interest in Mexico. In addition,Malaysian state-owned oil and gas group Petronas expects to open an office in Mexico very soon.
“BG is also interested in bidding with other partners when tenders open, but unlike Noble, it is not wedded to being the operator of fields on which it bids,” writes the Financial Times.
Noble has reportedly been talking to Mexico’s state-operated oil company Pemex about joint ventures for at least the last two years, and is already busy developing five other newly discovered sites in the Gulf.
“Deepwater is our initial interest area,” shared Chuck Davidson, Noble’s CEO. “Deepwater exploration is our core competency… the Perdido Fold is an area which we are interested in.”
In addition to Mexico’s vast untapped promise, it is also home to a number of well-established fields, such as shallow-water giant Cantarell, many of which are in need of modernizing in order to realize their full potential. This is reportedly a main area of interest for Occidental, which brings in around three-quarters of its business from fields that were discovered prior to 1970.
“The bulk of our business is enhanced oil recovery,” shared Steve Chazen, Occidental CEO. “Mexico is one of the principal opportunities for this kind of activity left in the world.”