Mexico's energy reform faces test in upcoming deepwater auction

An auction of deepwater oil and gas fields offshore Mexico later this month may be the last major opportunity for Mexico to capitalize on its energy reforms.

Offshore staff

MEXICO CITY – An auction of deepwater oil and gas fields offshore Mexico this month may prove to be the last major opportunity for President Enrique Pena Nieto’s government to capitalize on the opening of its energy sector, according to a Reuters report.

The Jan. 31 tender of licenses to explore and drill in 29 blocks in the Gulf of Mexico could represent the largest amount of oil and gas wealth on offer since the completion of a 2013-14 legislative overhaul that opened Mexico’s energy arena to foreign investment.

Many of the biggest global oil firms have registered to take part, including Exxon Mobil Corp., Royal Dutch Shell, BP, Total and China Offshore Oil Corp. The blocks that Mexico is offering could attract billions of dollars in investment from companies that have long desired access to the deep waters on Mexico’s side of the Gulf, the report said.

Energy Minister Pedro Joaquin Coldwell, seeking to temper expectations, said investors may also be influenced by President Trump’s corporate tax cuts and an increase in exploration and production opportunities in other parts of the world. “In that context, we estimate that if we assign seven lots – seven blocks at a minimum – from there onward, the auction could be highly successful,” Joaquin Coldwell told Reuters.

The auction is the eighth group of fields put on the block since an inaugural Mexico tender in July 2015, which fell flat as crude prices were in the midst of a protracted slide. Mexico plans another shallow-water oil and gas auction in late March, but that is not expected to yield the same scale of investment as the deepwater round.

01/19/2018

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