Bids for private oil exploration in Mexico coming in 2009
Pemex, Mexico’s state-owned oil company is hard at work on contracts that will provide private petroleum companies’ access to Mexico’s energy industry for oil and gas investment and exploration. The first deals from these contracts are expected to come in December according a Pemex executive. The groundwork for these contracts is significant because Mexican law prevents private participation in the oil and gas industry. Pemex is seeking outside investment because Mexico’s oil production has fallen to its lowest level since 1995. From Reuters:
“We’re on track to have a model of the contract ready by the end of June and then we will start having consultations” with industry, Pemex exploration and production chief Carlos Morales told the Reuters Latin American Investment Summit. International oil companies have been quietly watching developments in Mexico due the widely held belief that unexplored areas, such as the deeper waters of the Gulf of Mexico, hold billions of barrels of oil. Private oil companies have been locked out of Mexico since 1938 when the country nationalized the industry. Many Mexicans still oppose allowing foreign firms back in, even under limited terms permitted by reforms enacted last year. Changes to energy legislation put in place in 2008 allow Pemex to offer incentive-based contracts to private companies. The companies will work as Pemex contractors and will not have any ownership over oil production or reserves. Critics of the reform call it back-door privatization. Supporters say the changes are needed to bring in capital and expertise.Pemex is expecting to offer as many as ten exploration contracts to private oil companies by the end of September with bids coming in by December. The contracts offer incentives to the private companies based on the size and profitability of any discoveries. The private petroleum firms will develop any discoveries on behalf of Pemex.
Published Friday, May 15th, 2009 at 4:42 am and filed under Industry News.