Shell awarded nine contracts, PC Carigali six, Qatar Petroleum five and PEMEX four

Round 2.4 Main Winners
Company Assigned Areas As consortium As lone-player Total awarded areas
Shell 2, 3, 4, 6, 7, 20, 21, 23, 28 2, 3, 4, 6, 7 20, 21, 23, 28 9
PC Carigali 10, 12, 14, 25, 26, 29 10, 12, 14, 29 25, 26 6
Qatar Petroleum 3, 4, 6, 7, 24 3, 4, 6, 7, 24 5
PEMEX 2, 5, 18, 22 2, 22 5, 18 4

 Oil major Shell walked away with nine contracts at Mexico’s Deepwater Round 2.4 on Wednesday, leading a pack that included PC Carigali with six contracts while PEMEX took home four.

The official results will be announced on Friday, Feb. 2, the same day on which contracts will be signed, said President Commissioner of CNH Juan Carlos Zepeda.

Nineteen bidders registered for round 2.4, consisting of five individual companies and 14 consortia (listed  here according to their arrival to the process):

Round 2.4 Bidders
1 ENI and Qatar Petroleum
2 ENI, Qatar Petroleum and Citla Energy
3 PEMEX
4 PEMEX and China Offshore
5 China Offshore and PC Carigali
6 China Offshore
7 Repsol, PC Carigali and Ophir
8 Repsol and PC Carigali
9 Repsol, PC Carigali, Sierra and PTTEP
10 BP and Statoil
11 BP, Statoil and Total
12 Chevron, PEMEX and INPEX
13 Chevron, PEMEX and ONGC Videsh
14 Shell and Qatar Petroleum
15 Shell and PEMEX
16 Shell
17 PC Carigali
18 PC Carigali, Ophir and PTTEP
19 BHP Billiton

For each area, the minimum and maximum additional royalties to be offered to the state were 5 and 20 percent, respectively. For more information on each specific area, the companies and consortiums as well as the licensing process, visit the Rondas Mexico website. Likewise, to get to know more about the results of previous rounds, take the opportunity to read our blog here.

In terms of content, the Perdido areas offered mostly superlight and light oil, with area 6 also having dry gas and area 8 humid gas. The areas lay in water depths of 1,500m to 3,000m. Area 5 has a 3D seismic coverage of only 31 percent and area 8 only 72, while all the others have a coverage of over 95 percent.

Perdido
Area Winner Additional Royalty (%) Additional Investment Factor Upfront Payment (US$)
1 Deserted
2 Shell and PEMEX 15.02 1
3 Shell and Qatar Petroleum 10.03 0
4 Shell and Qatar Petroleum 10.03 1
5 PEMEX 6.23 1
6 Shell and Qatar Petroleum 20 1.5 10,030,382
7 Shell and Qatar Petroleum 20 1.5 90,030,382
8 Deserted
9 Deserted

The Cordilleras Mexicanas areas offered mostly light oil with both dry and humid gas. 3D seismic coverage is over 90 percent for most of the areas, with area 17 and 18 having 79 and 48 percent, respectively.

Cordilleras Mexicanas
Area Winner Additional Royalty (%) Additional Investment Factor Upfront Payment (US$)
10 Repsol, PC Carigali and Ophir 20 1.5 30,247,805.67
11 Deserted
12 PC Carigali, Ophir and PTTEP 20 1
13 Deserted
14 Repsol and PC Carigali 19.98 0
15 Deserted
16 Deserted
17 Deserted
18 PEMEX 7.11 1
19 Deserted

The Cuenca Salina areas offered mostly heavy and light oil, with some also having heavy and extra-heavy oil. Only area 29 has humid gas. 3D seismic coverage is over 90 percent for most of the areas, with area 22 and 23 having 36 percent and 8, respectively. This makes area 23 the one with the lowest 3D seismic coverage of Round 2.4. The areas lay on water-depths of between 400m and 3,200m.

Cuenca Salina
Area Winner Additional Royalty (%) Additional Investment Factor Upfront Payment (US$)
20 Shell 20 1.5 90,154,514.03
21 Shell 20 1.5 110,154,514.03
22 Chevron, PEMEX and INPEX 18.44 1
23 Shell 10.08 1
24 ENI and Qatar Petroleum 9.53 1
25 PC Carigali 19.98 0
26 PC Carigali 20 1
27 Deserted
28 Shell 20 1.5 43,154,513.03
29 Repsol, PC Carigali, Sierra and PTTEP 20 1.5 151,253,352.89

‘RESULTS SPEAK FOR THEMSELVES’

The big winner of the Perdido region was the consortium of Shell and Qatar Petroleum, with the former as operator, winning a total of four areas. For areas 6 and 7, the consortia made a total upfront payment of US$100,060,764.

Meanwhile, PC Carigali won three areas on the Cordilleras Mexicanas region, each with a different consortium. It is the operator for one area. For region 10, PC Carigali won together with Ophir and Repsol as operator, making an upfront payment of US$30,247,805.67.

For area 21, two companies – Shell and BHP Billiton – and two consortiums – BP with Statoil and Total, and Chevron with PEMEX and ONGC Videsh – competed. Shell won by offering the maximum royalty and additional investment, together with an upfront payment of US$110,154,514.03. Chevron, PEMEX and ONGC Videsh came in second with an offer of US$42,100,101.

The consortium of Chevron with PEMEX and INPEX was awarded area 23 by offering 10.08 percent as an additional royalty and an additional investment factor of 1, for a score of 58.756. Shell came in second place by offering 13.44 as additional royalty and no additional investment factor, scoring 53.78.

Finally, area 29 saw the greatest number of bidders of Round 2.4 at five. The consortium conformed by Repsol, PC Carigali, Sierra and PTTEP was awarded the block after offering the maximum royalty and additional investment factor, plus US$151,253,352.89 as an upfront investment. The consortium of ENI, Qatar Petroleum and Citla Energy came in second by offering the same royalty and additional investment factor plus an upfront payment of US$86,723,456.

Round 2.4 Results
Average Additional Royalty per area (%) Average Additional Investment Factor Total Upfront Payment (US$)
16.13 1.03        525,025,463.65

After Round 2.4 concluded, Aldo Flores, Deputy Minister of Hydrocarbons at the Ministry of Energy, highlighted the success of the round. “Today’s results speak for themselves. We had a competitive process with companies coming from all over the world and reached notables results,” he said, mentioning that the 19 bidders that participated came from 10 countries – 14 in consortiums and five as lone players – and the 19 areas that were awarded – 11 for consortiums and eight for individual companies. He also pointed out significant facts from the round: US$23 billion are expected in the coming years, 1.5 times more than the investment gathered during all of the previous rounds; US$525 million that the Mexican Petroleum Fund (FMP) will receive from upfront payments; 23 exploration wells committed; and a total of 230,000 potential jobs to be created during the next 15 years.

He also added that, if and when all the awarded blocks reach their peak production, they could produce 1.5 million additional barrels per day by 2031. He expects first production coming from these areas by 2028. “This is a major advancement in the consolidation of the Energy Reform.” While public opinion places PEMEX as a company without the proper capital and technologies, Flores highlighted the capacity of the NOC to work under a new framework, as well as the four contracts it will sign as a result of Round 2.4. He also mentioned that the objective of the rounds is not only to produce oil, but to foster the whole industry and create economy clusters in each petroleum region that include every activity of the value chain that supports operations, from ports to equipment producers.

Salvador Ugalde, Head of Hydrocarbons’ Incomes Unit at the Ministry of Finance, said the fiscal regime and mechanism of the process had resulted in a competitive round. “The fiscal mechanisms are fostering investment in the country from all over the world.” He said the Mexican state would receive an average 64.7 percent of the income resulting from the oil production of the assigned areas. If higher production and price levels than expected are achieved, the government take could be up to 67.2 percent, he added.

For more articles on Mexico’s energy industry, check out our blog!

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