Mexico Planning First-Ever Deep Water Gulf Oil Auction

MEXICO CITY, Feb 26 (Reuters) – Contract awards for Mexico’s first-ever deep water oil auction covering ten potentially lucrative blocks will take place on Dec. 5, oil regulator CNH said on Friday, a tender that will test investor interest amid a worldwide price slump.

The ten blocks are located in the country’s territorial waters in the Gulf of Mexico.

The auction date was approved by a unanimous vote of CNH commissioners.

Four of the blocks straddle the maritime border with the United States in the Perdido Fold Belt where oil majors on the U.S. side, including Royal Dutch Shell and BP, have drilled dozens of commercially successful wells.

The remainder are located in the Salina basin along the southern rim of the Gulf.

Mexico’s energy ministry will award license contracts, similar to concessions, in the historic opening.

The government will limit the auction to the deep water blocks after initially announcing that heavy oil fields and several joint ventures with national oil company Pemex would also be offered.

Winning bidders will not be required to drill wells during the first four years of the contracts, an element designed to lure cash-strapped producers facing crude prices near 12-year lows.

The auction is the fourth phase of the so-called Round One tender, a major part of an energy reform launched in 2013 that ended the decades-long monopoly enjoyed by Pemex and aims to reverse eleven consecutive years of declining crude output.

The previous three auctions, including shallow water and onshore mature fields, awarded 30 of the 44 contracts that were offered. (Reporting by David Alire Garcia; Editing by Jeffrey Benkoe)

(c) Copyright Thomson Reuters 2016.

Unlock Exclusive Insights Today!

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

Sign Up