On September 6th Mexico’s Ministry of Finance released the minimum royalty values for companies participating in Round One’s last oil tender, as well as the economic conditions for the Trion farm-out. Both announcements have been highly anticipated by the operators expecting to enter the deep-water market in Mexico.

Regarding the deepwater oil tender, the Ministry of Finance set the minimum royalty value at 3.1 percent for the companies bidding on the blocks one through four, and 1.9 percent for blocks five through ten.

For the Trion farm-out, additional-royalty values were stablished at a minimum of 3 percent and a maximum of 4 percent. In the eventuality of a tie between interested companies, it should be resolved through cash offerings, of which 10 percent will be paid to the state and 90 percent will be destined as a PEMEX investment. Another economic condition set by the Ministry is that the winner of the bid will have to recognize previous investments made by PEMEX during the initial Trion exploratory operations.

The Ministry of Finance took into consideration the current state of the industry, future outlooks and technical characteristics for the fields of interest to set the conditions announced. Twenty-six companies prequalified for the upcoming deepwater bidding round.

Some Big Oil companies are said to be considering alliances to enter the bidding round, called Mexico’s Energy Reform “Crown Jewel” by the market, like Exxon Mobil, Chevron, Shell and BP, among others, according to news reports.

Pemex will participate as an operator for the first time since Round One started. This will be the first time PEMEX competes as a productive state-owned enterprise against other operators.

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