Mexico’s Ministry of Economy has opted to set a low local content requirement for the upcoming deepwater bid round in December.
The new rule, announced in Mexico’s official journal of the federation (DOF), says oil and gas companies must use 8% local content in deep and ultra-deep waters by 2025. This number is up from 3% established in 2015.
According to Article 46 of Mexico’s hydrocarbon law, exploration and extraction activities performed in national territory should achieve, on average, at least 35% domestic content, however, this goal will exclude deep and ultra-deepwater exploration and extraction, the government said. Both the Economic Secretary and Energy Secretary agreed that goals should be set in accordance to the characteristics of the activity, and noted that there are very few companies, globally, that can provide deepwater equipment and services.
“The goals of national content should consider the market conditions to determine its viability and be an instrument that promotes investments of such enterprises in Mexico and impel the national sourcing to reach international standards,” the government said.
With Mexico’s deepwater round, Mexico is attempting to entice foreign investment by auctioning off 10 blocks, including four on the Mexican side of the Perdido Fold Belt (of which OE explored in our March 2016 issue). Ultimately, by having a reasonable to achieve local content requirement can only help attract foreign operators.
In February, at the IHS CERAWeek conference in Houston, Mexican President Enrique Pena Nieto reiterated his and his government’s commitment to the energy reform passed in 2013.
“Just like I committed myself to achieve the energy reform, now I am committed to accomplish its full, effective and timely implementation,” he said.
Image: Mexico's Energy Secretary Pedro Joaquin Coldwell, courtesy of SENER.
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