Giant oil firms bid anew for Mexican oil fields

Mexico’s energy sector is suffering from oil production setbacks and is encouraging new oil investment from foreign firms with the hopes of reviving the country’s declining outputs.

Pemex, Mexico’s state-run oil firm, has recently disclosed the names of 16 consortiums that have placed their bids to operate oil fields located in Veracruz and Tamaulipas, Mexico.

Spain’s Repsol and American multinational Chevron were among those who presented their bids and, by  June 19, firms who have committed to produce the most crude at the least price shall be awarded the contract.

This is Pemex’s 2nd round of bids since 2008 when it first opened its oil industry to external investors after 7 decades. Once the bids are concluded, Pemex expects foreign firms investing in oil exploration in Mexico to pour in $215 million worth of cash in a span of 2 years.

The offered oil fields are already mature, and Pemex needs foreign investors to help revive production which is going downhill. The firm projects that the oil fields are capable of turning out 140,000 bpd – an optimistic forecast based on 13,000 bpd actual turn-out.

The company has suffered a major drop in oil production, though it was still able to produce current daily volumes of 2.5 million barrels. In the long-term however, it is at risk of turning into a net oil importer. Therefore, it is actively pursuing oil exploration all the more.

The majority of its oil resources are buried deep within the Gulf of Mexico (GOM), and the company wants to tap these further through the help of foreign investors. However, oil firms opine that the company must first create an investment atmosphere that is enticing enough for firms to take risks and invest in oil exploration in the GOM area.

Right now, Pemex’s oil deals allow it to retain ownership of oil reserves and foreign contractors are just paid based on project revenues. A total of 22 oil fields are to be bidded out, and Pemex disclosed that these could hold more than 200 million barrels of crude oil reserves.

Mexico intends to bid out the Chicontepec oil field after the presidential elections slated for July.

Sources say that Enrique Pena Nieto, who is currently on top of the presidential race, has been pushing for reforms regarding Mexico’s energy sector and urging private firms to invest in its oil fields. According to Nieto, Mexico should be able to emulate what Brazil’s Petrobras has done for its oil sector.

However, Andres Manuel Obrador, another leading presidential candidate is not keen on allowing foreign firms to invest and help revive its ailing energy sector.