Undeterred by current market conditions, Mexico’s President Enrique Peña Nieto vowed to remain committed to implementing energy reforms that open the country to foreign investors.
“Regardless what happens in the international context, Mexico will move forward with the energy reform implementation,” Peña Nieto said Feb. 22 at IHS CERAWeek. “Just like I committed myself to achieve the energy reform at the moment, now I am committed to accomplish its full, effective and timely implementation.”
Although the price of oil has inched higher in recent days, surpassing the $31/bbl mark, it has fallen far from highs more than 3x that much. Lower commodity prices have cut into oil and gas companies’ profits, forcing widespread cutbacks and layoffs as Mexico gears up for another bidding round as part of its massive energy reform efforts.
But Mexico will “maintain the rhythm in the bids,” Peña Nieto said.
To applause, the president announced Mexico will launch a deepwater round—the country’s fourth—in early December.
“This is not the time to stop. This is the time to move forward,” Peña Nieto said, noting the move demonstrates Mexico’s commitment to energy reform. “Regardless of the oil price in the short term, Mexico decided to have the technological, financial and risk management capability that the global oil industry has already developed for this type of large-scale project.”
The deepwater exploration round is expected to attract the most attention, given its location in the oil-prone Perdido Fold Belt and Cuenca Salina areas. In the Perdido Fold Belt area, four blocks will be offered, while six will be offered in the Cuenca Salina area.
The auction will follow three other calls for bids, which have progressively grown in interest.
In what could be called its most successful auction yet, Mexico’s third call for bids attracted 40 companies willing to invest in oil and gas acreage despite rough market conditions. All 25 of the onshore areas on the table were awarded.
The competition was fierce was some the right to develop hydrocarbons in some of the mature fields, getting more than a dozen offers. Nineteen of the fields offered during this round are already producing oil and gas. During fierce bidding, more than a dozen offers were put up for the right to develop hydrocarbons in some of the mature fields; 19 of the fields offered in this round are already producing oil and gas.
The first two calls offered shallow-water acreage offshore. During the second call, three of five production-sharing contracts offered were awarded. That was considered an improvement from the first call after changes were made to the process, including disclosing Mexico’s terms. In that round, eight of the 14 blocks offered received no bids, and four were thrown out for failing to meet Mexico’s minimum requirement of 40% pre-tax profits.
Peña Nieto said Mexico will continue implementing energy reform with the “highest standards of transparency and accountability” and work toward an energy sector with “regulatory and contractual practices of excellence, which will give total certainty to the investors.”
“With this purpose, we will maintain a competitive and stable tax framework,” Peña Nieto added, “while the Mexican authorities shall continue to work with total openness and disposition to continue improving their processes.”