Mexico Oil Auction Winners Stay Positive as Industry Slows Down

Eduardo Ramos / Shutterstock

By Amy Stillman (Bloomberg) — Mexico’s oil auction winners BHP Billiton Ltd and DEA Deutsche Erdoel AG are hopeful that the slowdown in bid rounds is a feature of the country’s political transition and won’t be permanent.

“We have expectations that things will pick up again and continue,” said DEA Deutsche chief executive officer Maria Moraeus Hanssen. The company expects to start wells in Mexico in one or two years and is in the process of seeking approval of its development plan for the onshore Ogarrio field that it operates in a joint-venture with Petroleos Mexicanos. It has also won rights to four exploration blocks in Mexico and is the operator of three of them.

Australian miner BHP, which won a 2016 tender to partner with PEMEX in its deep-water Trion field in the Gulf of Mexico, expects to start appraisal drilling before the end of the year and take advantage of higher oil prices, said Steve Pastor, the company’s petroleum operations chief, in a Thursday interview in Acapulco. “The opportunity is very attractive for us to move quickly right now because we’re still enjoying a relatively low point in the cost cycle,” said Pastor.

While Mexico is due to hold competitive bid rounds in February next year, President-Elect Andres Manuel Lopez Obrador has said he could indefinitely suspend oil auctions when he comes into office on December 1. That could see private companies focus their efforts on purchasing stakes of privately-owned oil assets in Mexico.

“At a certain time there will be a secondary market that we are not ruling out,” said Moreaus Hanssen.

© 2018 Bloomberg L.P

Unlock Exclusive Insights Today!

Join the gCaptain Club for curated content, insider opinions, and vibrant community discussions.

Sign Up