The Exploration and Production Bidding Rounds have been a success for CNH and Mexico, Héctor Moreira, Commissioner of CNH, told the Mexico Oil & Gas Summit 2017. “The results of Round 2.3 have without a doubt showed the great interest that international investors have in Mexican soil,” he told the audience in his closing presentation at the Mexico City Hotel Sheraton María Isabel on Wednesday.
Success does not come from one day to the other, he said, adding that a learning process was necessary. Round Zero started everything. In that round, PEMEX was awarded 489 assignations of which it would decide whether to keep producing or migrate into shared production contracts with partners, as it did with Trion, or without partner, such as with Ek-Balam.
Rounds One and Two were also economic successes, Moreira said. “Round One is expected to bring around MX$49 billion, or almost US$2.7 billion, while Rounds 2.1, 2.2 and 2.3 are expected to bring MX$11 billion.” Moreira also pointed to the creation of Mexican operating companies. “We went from having only one operating company, three years ago, to now having 33 Mexican operating companies in the environment,” he said.
CNH also recognized the challenges that have arisen, not necessarily as a direct result of the Energy Reform, admitting that having Mexican operating companies is only one part of the equation. To make sure that a healthy Mexican oil and gas value chain is created, Mexican service companies are needed. “The problem of having few Mexican service companies comes from before the Energy Reform, but it is a problem that we are working to tackle. To solve this, Mexican associations that look to the needs of Mexican companies, CNH and the Ministry of Economy must allow for a healthy discussion to create a plan that tackles this problem,” he said.
Moreira is expecting more success to come as the basis for Round 2.4, comprised by 30 blocks, was announced during a live transmission earlier in the day. The basis will be formerly published in the DOF on July 20 for the general public to consult.
Moreira also took the opportunity to announce an important new rule to be used on Jan. 31, 2018, when the economic offers for Round 2.4 are received. “In case they bid with the maximum added royalty and investment, interested companies must include an economic offer. This economic offer will only be given to the government if there is a tie,” he said.
He also highlighted CNH’s willingness to improve the rounds. One main area in which he sees improvement is the number of blocks to be included in the rounds. “CNH has the areas included in the Five-Year E&P Bidding Plan only, but if the market asks for it we are open to include more blocks.” CNH’s objective with the rounds is to incentivize the Mexican industry, he added, “We want companies to be profitable, that is the only way they will get capital to invest more in the country.”
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