U.S. energy giants Exxon Mobil Corp. XOM and Chevron Corp. CVX are among the 19 companies and seven groups selected to bid for Mexico's maiden offshore oil blocks auction.
The supermajors have been pre-qualified alongside the likes of smaller operators Hess Corp. HES, Marathon Oil Corp. MRO, Cobalt International Energy Inc. CIE, as well as Norway’s Statoil ASA STO and France’s TOTAL SA TOT to submit bids for Mexico's July 15 auction, as per National Hydrocarbons Commission (‘CNH’) — the country's upstream regulator.
Round One Details
Some 34 companies had applied to pre-qualify to bid for 14 shallow-water exploration blocks covering nine fields, as Mexico looks set to welcome private producers to drill in its waters for the first time in more than 75 years.
In the second tender of its ‘Round One’ offerings, the CNH will put 9 shallow-water fields in the Gulf of Mexico in September, while the third phase will see the auction of 26 onshore blocks in December.
The areas being bid out for exploration in Round One are estimated to contain 356 million oil-equivalent barrels in reserves.
Terms & Conditions
Technical aspects for pre-qualification required the parties to have specified knowledge and experience in working in three or more shallow waters exploration and production projects or in one or two large-scale developments, which entails collective capital investments of $1 billion.
According to the bid criteria, contracts will have terms of 4 years, extendable for a further two years. Moreover, the parties will have to drill at least one well after winning the block.
A Game-Changer for Mexico?
One of the world’s largest energy markets, Mexico recently opened up the country’s oil and natural gas fields to investment by foreign companies. The historic move – aimed to counter falling output – will see private entities operate in Mexico’s vast energy sector for the first time since 1938, when the industry was nationalized. The Latin America's No. 2 economy is hoping to mop up investments up to $50 billion by 2018 by luring multinationals like Exxon Mobil and Chevron to explore oil and gas in the country.
Mexico feels that that it is necessary to attract state-of-the-art technologies and the financial muscle of overseas players to arrest falling output at the existing wells as well as develop promising deepwater reserves in the Gulf of Mexico.
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