Mexico to tender 10 deepwater blocks

OREANDA-NEWS. December 21, 2015. Fresh off a successful onshore tender, Mexico is pushing ahead with a much-awaited licensing round for deepwater blocks in its under-explored waters of the Gulf of Mexico.

Oil regulator CNH yesterday approved the tender for 10 deepwater blocks, including four in 1,500-3,000m of water depth in the Perdido Fold Belt.

The six other blocks lie in the southern swath of the Gulf of Mexico, in water depths in excess of 2,500m.

Most of the blocks are expected to hold light crude, with some prone to natural gas.

Mexico's energy ministry expanded block sizes to 1,650-3,000km2 and made other adjustments based on industry consultations.

The 35-50 year licenses cover three stages: exploration up to 10 years, evaluation up to three years, and development.

Each block is expected to bring in an estimated \\$4.4bn in investment over the life of the contract, deputy energy secretary Lourdes Melgar said.

National content requirements build gradually, starting at 3pc in the initial phase and up to 10pc in the development stage, a percentage deemed "reasonable" by industry executives consulted by Argus.

Under license contracts, "the risk of higher costs lies with the contractor, the state receives the offered payment whatever happens in terms of cost," energy secretary Pedro Joaquin Coldwell said at a Mexico City event today.

The request to access geological data – which some companies have already been able to consult in an initial feedback period with the industry – will begin on 6 January and end on 14 April. The data room will remain open for nine months, CNH head commissioner Juan Carlos Zepeda Molina said.

Pre-qualification will take place between 14 June and 1 July, while the actual tender date will be determined in the third quarter of next year.

Participants can run individually or as part of a consortium, but unlike previous tenders, they can participate in more than one consortium at a time.

Bidders will be required to demonstrate experience in at least one other project of exploration or extraction in waters deeper than 1,000m and of a similar magnitude.

The operating firm must hold a minimum 30pc stake and show proof of a minimum \\$2bn in shareholder's equity or \\$10bn in assets. Financial partners will be bound by a \\$250mn threshold.

The capital-intensive deepwater acreage, some of which lies close to the maritime border with the prolific US side of the Gulf, is appealing to big oil companies with technological expertise and a tolerance for risk.

Executives from several oil companies were present at today's event, including ExxonMobil, Shell, BP, Russia?s Lukoil and Norway's Statoil.

The tender for license contracts will be the fourth in a staggered first round that started in December 2014 under a comprehensive energy reform.

The reform ended the entrenched monopoly of Mexico?s state-owned Pemex. The company has made some preliminary deepwater discoveries, and is expected to partner with foreign companies to bid in the upcoming auction.

This week Mexico awarded all 25 blocks on offer in an onshore tender, with new Mexican companies figuring prominently in the list of winners.

The energy secretary said it has given the green light to government entities to prepare the fifth and last round one tender for unconventional exploration in Chicontepec and Tampico-Misantla, "given the appetite shown by oil companies" in this week's onshore tender.