Pemex CEO: Gulf Of Mexico 1st Round Tenders Expected Late '11, Early '12

HOUSTON (Dow Jones)–Mexico’s state-owned oil company Petroleos Mexicanos, or Pemex, expects to have a first round of tenders on some areas of the deep water of the Gulf of Mexico late this year or early 2012, its top executive said Tuesday.

Pemex Chief Executive Juan Jose Suarez Coppel said in a press conference in Houston that the company will open areas in the deep water Gulf of Mexico that are located close to the U.S. part of the Perdido Basin, where international oil giant Royal Dutch Shell PLC (RDSA, RDSA.LN) operates one of the deepest and more challenging deep-water projects offshore the U.S.

Suarez said the company expects tenders for the Gulf of Mexico to attract large international oil companies that have the experience needed to operate in deep water. The fiscal terms for the blocks to be offered in the Gulf are expected to be more attractive than the ongoing tenders for mature oilfields that are incentive-based as Pemex will try to offset some the risks companies face when working in deep water, he added.

Pemex needs outside expertise to seek out and produce the more difficult deposits in the oil monopoly’s portfolio as the easy oil found in the shallow waters of the Gulf of Mexico during the 1970s continues to decline. Pemex has significant deep-water reserves but no production in the area.

Pemex earlier this month launched its new incentive-based contracts in a bid to diversify its projects and increase crude-oil production levels.

The incentive-based contracts are designed to give outside companies greater flexibility than Pemex’s standard services contracts, which aren’t attractive for oil majors that prefer risk contracts, especially in places like the deep waters of the Gulf. Mexico’s constitution prohibits oil or gas concessions for private or foreign companies.

The first tenders under the flexible contracts will be for six mature fields in southeastern Tabasco state that are either currently producing little oil or have been abandoned altogether. Pemex expects the offer to attract relatively small companies that are specialists in squeezing more oil out of mature fields. The company will name the winners of the onshore tender in August. Companies will have a year to present their development plan and are expected to start drilling in late 2012, Suarez said.

-By Isabel Ordonez, Dow Jones Newswires