OREANDA-NEWS. Mexico's state run Pemex pulled out of the first phase of the country's historic, staggered bidding round for offshore drilling rights, known as "Round 1."

In a surprise announcement, Mexico's energy secretary Pedro Joaquin Coldwell said Pemex was no longer competing against private and foreign oil companies for 14 shallow water exploration blocks in the Gulf of Mexico.

Pemex has particular expertise in shallow water drilling and has extensive infrastructure near many of the blocks up for auction. But the drop in crude prices has cut into the company's budget, Coldwell said, limiting its ability to spend on more drilling. Pemex was also given 87pc of the county's probable reserves and 21pc of prospective reserves in a round held just before Round 1, he said, so the company has plenty of prospective work.

Earlier this week, four other companies also pulled out of the running, reinforcing a sense of disillusion with the opening of the country's energy market.

Data from oil regulator shows that 17 companies and seven consortiums are still in the race.

Under a sweeping energy reform passed last August, Pemex lost its 75-year old monopoly over upstream and downstream sectors. The first round began in December.