Mexico expands tender acreage by a third

OREANDA-NEWS. October 23, 2015. Mexico has expanded acreage subject to future upstream auctions by 32pc in an annual five-year tender plan presented this morning by the energy ministry.

But even though the acreage increased, remaining resources rose by only 2.1pc, suggesting that most of new areas are unexplored frontier opportunities.

The final version of the 2015-19 strategic plan followed three months of consultations with nine Mexican states and various industry participants, energy secretary Pedro Joaquin Coldwell said today.

The 40-page document includes 96 areas for exploration and 237 development blocks covering a total of over 235,000km2 (146,000 mi2), or more than 56,000km2 more than in a draft published in June. The precise delimitation of each block will be defined closer to the tender dates, the ministry said.

The overall increase in acreage reflects the creation of new blocks as well as the expansion of existing ones.

According to the report, the overall remaining resources included in the ongoing round of tenders that kicked off last December, known as Round One, are 70.1bn bl of oil equivalent (boe), or 1.4pc less than in the initial draft.

Remaining resources in Round Two will be a little under 14.8bn boe, over 12bn boe for Round Three and 7.6bn boe for Round Four.

In response to industry requests, the energy secretary pointed to a need for blocks to be adjacent so that firms can share infrastructure and reduce operating costs, increased block size for areas with higher geological risk, and modifications to the auctioning order within each staggered licensing round.

Starting with the next round of tenders, Mexico plans to begin with the auction of blocks close to the coast, followed up later with capital-intensive deepwater areas.

Industry reaction to the plan was generally upbeat.

"It's been a very participative, transparent process that ensures competitiveness," said

Enrique Hidalgo, chief executive of ExxonMobil in Mexico and president of the recently created Mexican association of oil companies (Amexhi) that represents 37 companies.

Another executive with a major oil company said the new report included "some good news" for the industry.

Many big oil companies are primarily interested in high-risk, high-return deepwater acreage, especially in the Perdido Fold Belt, near the US border.

Another area of major interest is the Tampico-Misantla basin, which includes unconventional resources.

Executives said an average 12 years is needed to start deepwater production, 10 years for shallow water, three for onshore and two for unconventional.

The energy secretary plans to update the plan in the third quarter of each year.