After months of waiting, the Ministry of Energy (SENER) finally announced the deepwater blocks that would be tendered in Round One’s phase four, the crown jewel of the reform. To the surprise of industry experts, the ten blocks on offer are very different to those originally planned by the authorities earlier this year. They are located off the coasts of Tamaulipas, Veracruz, and Tabasco, at depths located between 1500-3500m.
Seeing that all of the fields are exploratory ones, the contracts will be divided into three steps, the first one involving the drilling of a small well before moving on to the development and production stages. These stages will last 10, 3, and 37 years respectively. Over these cumulated 50 years, each block will require an investment of US$400 million according to SENER. As for every bidding round, companies with an interest in participating will be put through a prequalification process requiring them to show a corporate guarantee proving they have a minimum net worth. Juan Carlos Zepeda, President Commissioner of CNH, announced that companies would be able to participate individually or in the form of a consortium, and for the first time, companies will be able to be part of various consortiums within the bidding round. Curiously, joint-ventures with PEMEX are absent from the bidding round, but the parastatal had no comment on the absence of its farm out projects. The only commentary came from a CNH official, who stated these were “on hold”, without providing any additional information.
Operators will be required to hold a stake of at least 30% of the consortium, and while the government will retain part of the firms’ brut income in addition to obtaining taxes and fiscal royalties, companies will be able to keep possession of their oil production.
Pedro Joaquín Coldwell, Secretary of Energy, announced that the highly anticipated deepwater auction would not be held until late in 2016, due to the adverse price environment. Nonetheless, Lourdes Melgar, Undersecretary of Hydrocarbons at the Ministry of Energy (SENER), does not expect low oil prices to discourage investment in this phase, as deepwater projects are an investment for the long-term. The late auction date will give oil companies time to analyze the seismic data to be provided by the government in January, and to get a grasp of the safety and environmental regulations to be published by ASEA, the new agency in charge of regulating safety and the environment in the oil and gas industry. So far, the deepwater sector remains unregulated.
In addition to this disclosure of information on phase 4 came the announcement by Coldwell that the fifth phase was now unfrozen, despite the stubbornly low oil prices. The phase will tender the Chicontepec blocks along with the basin of Tampico-Misantla, both holding unconventional resources. The Minister also mentioned that deepwater and unconventional resources accounted for three-fourths of Mexico’s potential for oil and gas reserves.
Sources: The Wall Street Journal, Reforma