Juan Carlos Zepeda, president commissioner of CNH, announced a third bidding round dedicated to conventional onshore resources during an industry event Thursday Oct. 19. The terms of this onshore bidding round will be established this year or early in 2018, said Zepeda to Reuters, and contracts will probably be signed during the summer of 2018.
This still undefined onshore round will complement previously announced deep water round 2.4 comprising 29 blocks and shallow water round 3.1 comprising 35 blocks. The large number of opportunities represented by these blocks is widely seen as an effort to lock in as many contracts as possible before the presidential elections next July 2018.
Zepeda also mentioned the possibility of yet another round for unconventional onshore resources being put up for bidding.
The political risk represented by the elections has been a point of interest within recent industry gatherings and a recent OECD report advocated measures to increase the autonomy of Mexican regulatory organs from the government and the political cycle.
The large number of contracts being put up for bidding also means that the capacity of analysis of the blocks for some companies may be stretched thin, as their geoscientists departments attempt to evaluate bids on the many different blocks available.
To this date 72 contracts have been signed by E&P companies representing a value of US$60 billion. According to the last statistical update published by the CNH on Oct. 5, 30 of the winners of the licensing rounds have been Mexican companies, nine US, four British and three Colombian, to mention a few.
The success or failure of these last bidding rounds during the current federal administration will be one of the most important legacies of Peña Nieto government’s signature legislation: the 2013 Energy Reform. Industry participation in these licensing rounds might also impact the policies of an incoming administration with regard to the oil and gas sector.