Oil majors shun Mexico auction with just two blocks sold
MEXICO CITY (Bloomberg) -- Fewer than half of the companies qualified to bid in Mexico’s first auction for offshore oil blocks have chosen to submit offers so far as that nation tries to entice foreign investment decades after seizing energy assets.
ExxonMobil Corp., Chevron Corp. and Total SA passed on the first 14 shallow-water oil blocks auctioned by Mexico Wednesday in the country’s first-ever sale of territory in the Gulf of Mexico, 77 years after seizing energy assets. Only two of Mexico’s first 13 oil blocks up for auction received qualifying bids.
Statoil ASA and Eni SpA are among 14 of 38 qualified bidders who participated. A consortium of Sierra Oil & Gas, Talos Energy and Premier Oil Plc won blocks No. 2 and No. 7, Mexico’s National Hydrocarbons Commission and Energy Ministry announced Wednesday. Other blocks either received no bids or bids that didn’t meet the government’s minimum requirements.
The auctions are the first opportunity for private companies to explore for oil and gas in Mexico since the nationalization of the country’s crude industry on March 18, 1938. Results from the final block were pending as of 2:56 p.m. New York time.
Nine out of the 14 oil blocks have probabilities of commercial success ranging from 20% to 36%, according to data from the National Hydrocarbons Commission. Their prospective resources ranges between 164 million and 384 MMboe. Two other blocks have higher success probabilities, 42 and 54%, while the lowest has only 6%.
Block 2 has as much as 341 MMboe in 194 square mi off the coast of Veracruz, while Block 7 has a maximum of 263 million bbl in 465 square mi off the coast of Tabasco, according to the hydrocarbons commission.
Still Interested
Spokespersons for Exxon and Chevron said that while they weren’t interested in the shallow water round of bidding, they haven’t given up on being part of Mexico’s energy reform.
Chevron “continues evaluating opportunities in Mexico and remains optimistic about the steps taken by the Mexican government to open the energy sector,” Isabel Ordonez, a Chevron spokeswoman, said in an e-mail on Wednesday.
