Mexico’s national oil company Petróleos Mexicanos (PEMEX) is joining a list of international oil and gas companies by opting out of Mexico’s historic Round One.
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Image from PEMEX. |
At an event in Mexico City, Mexico’s Energy Minister Pedro Joaquin Coldwell said that PEMEX would not bid in the auction of 14 shallow water oil blocks, and instead conserve cash, and focus on existing operations and upcoming farm outs. The company was deterred from bidding in Round One after its earnings took a hit from low oil prices, and PEMEX endured a reduction in its income by more than 50%. PEMEX will however participate in later auctions scheduled for this year, according to a Bloomberg report.
Round One will offer up 14 shallow water exploration blocks covering nine fields with an estimated 356 MMboe of 2P reserves. Awards for bids are expected next week (15 July).
Earlier this week (7 July), four other companies that were part of separate consortia, which were prequalified for Round One, requested to exit the competition. Those companies include Noble Energy, Glencore E&P, Colombia’s Ecopetrol, and Thailand’s PTTEP. No reason for the withdrawals was given.
The last-minute departures leave a total of 18 individual companies and seven consortia to battle for a piece of Mexican shallow water opportunities.
The 18 individual companies with prequalification status include: Chevron, ExxonMobil, Atlantic Rim Mexico, BHP Billiton, Cobalt Energy, Spain’s CEPSA, Hess, Hunt Overseas, Russian giant Lukoil, Maersk Oil, Marathon, Nexen, India’s ONGC Videsh, Canada’s Pacific Rubiales, Plains Acquisition Corp., Premier Oil, Statoil and Total.
The seven consortia with prequalification certificates include: BG Group alongside Galp Energia; Italy’s Eni along with CASA Exploration; Murphy Worldwide along with Petronas; Pan American Energy along with E&P Hidrocarburos y Servicios; Talos Energy along with Sierra Oil and Gas; Tullow along with Petrobal; and Woodside Energy along with Diavaz Offshore and Pluspetrol.
PEMEX shallow water discoveries
Despite dropping out of Round One, PEMEX has recently been successful in shallow water discoveries. In June, PEMEX announced it discovered four new shallow water fields offshore Mexico that have the potential to produce at least 200,000 b/d of oil and 170 Bcf/d of gas.
Three of the fields are near Campeche and include Batsil-1, Esah-1, and Cheek-1 that could fetch 100,000 b/d and about 80 MMcf of gas. At Tabasco, Xikin-1 is estimated that 100,000 b/d of light oil and 90 MMcf/d of gas could be discovered.
Production is expected to commence within 16 months, and achieve production 20 months later. Characterization studies done on the areas estimate that combined total reserves could hit a total of 350 MMboe.
PEMEX attributed the discoveries as the biggest news to hit the Mexican national oil company in five years, following the Tsimin-Xux and Ayatsil fields.
PEMEX problems
Alongside the 50%+ reduction in income, PEMEX is in the spotlight for one of its workers being liked for possible extortion, and has been involved in several accidents and fires in recent months.
Earlier this week (7 July), the company announced it is working with the Secretaría de la Función Pública (SFP) on an investigation involving one of its workers for allegations of extortion from food service and hospitality company Súper Pereyra, S.A. de C.V.
The PEMEX worker along with three others who were arrested on 5 July, are being charged with extortion for demanding about US$634,718 (10 million MXN) in cash and two vans from Súper Pereyrato for support of the development of a contract to provide food service and hospitality for a living quarters platform in the Bay of Campeche.
For three consecutive months, (from April through June 2015), several fires and deaths occurred on PEMEX platforms.
Most recently on 22 June, the unmanned Akal-H platform caught fire and was quickly put out in the Bay of Campeche. The fire caused a leak of natural gas and oil, with an estimated production loss of 15,000 bbl. Minimal damage and no injuries were reported.
In May, two Typhoon Offshore Services workers died and one was injured at the Troll Solution jackup platform, after one of its legs failed.
In April, a fire on the PEMEX's Abkatún central processing platform in the Gulf of Mexico killed four workers, left three missing and 45 in need of medical care.
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