On Wednesday this week, Pemex announced the 16 companies pre-qualified to participate in the NOC’s second round of integrated service contracts. The list of companies includes major oil corporations such as Chevron, Schlumberger, Halliburton and Baker Hughes. Vitol, Tecpetrol, Pico Oil, Dragados/ATP Oil, Industrial Perforadora de Campeche, Monclova Pirineos Gas, Diavaz/Weatherford, Perfolat/Servicios Asociados LTDA, Petrofac, Repsol, Saipem and Telpico are the other companies bidding on the contracts, according to Pemex’s list.
The contracts, which will be awarded on June 19th, include 48 potential tenders in 22 mature oil fields, located in two offshore areas in shallow waters (Arenque and Atún) and four in onshore areas (Altamira, Pánuco, Tierra Blanca and San Andrés) in the states of Tamaulipas and Veracruz. The six areas, currently producing an annual average of 12,000 bbl/day, are already in decline and Pemex is pinning its hopes on private companies helping increase production to 140,000 bbl/day.
Given the profiles of some of the fields, Pemex expected to attract the attention of mostly Mexican companies or mid-sized IOCs. For that reason, some commentators were surprised to see the names of major players in the oil and gas industry, such as Chevron and Halliburton, among the companies interested in winning the ISCs.
Through the ISCs, the world’s seventh larger producer is looking to attract around US$215 million of investment in the first two years, as well as to boost the country’s total production to 2.55 million bbl/day and avoid becoming a net importer of oil.
The contracts, whose term may vary from 25 to 30 years, will be awarded based on which company is able to produce the most oil at the lowest barrel price. Pemex had previously announced that the winners of the contracts will be able to recover a 100% of the exploration costs and that the NOC will retain an option to buy a 10% working interest on the areas offered. Under the current contracting scheme, the winner companies will be paid according to the profitability of the field. However, oil reserves will remain the property of Mexico, as stated in the Mexican Constitution.
Pemex awarded the first round of ISCs on August 2011, in an unprecedented step towards opening a sector that is run by a public monopoly. The third round of integrated service contracts, which will include the Chicontepec field, is expected to take place before the end of the year. However, it is highly unlikely that this will occur before the July 1st presidential elections.
The NOC stated that the tendering process has been conducted openly and transparently so far, from the official announcement to the pre-selection of the companies. More information on the process is available at Pemex.