Mexico auctions off fields

Mexican oil and gas regulators awarded 14 onshore leases to private companies on Tuesday, as part of the country’s effort to revitalise its hydrocarbons industry. The auction of 25 contracts will attract $1 billion in investments according to the country’s oil and gas regulator’s estimates.

The 14 leases were leased out by early Tuesday evening. Mexico’s Diavaz Offshore, which has been providing services to Mexican state-owned Pemex, won two contracts. Canada’s Renaissance Oil Corp picked up three.

Two Mexican startups, Strata Campos Maduros and Compania Petrolera Perseus, have also won two contracts each. Mexico has successfully tendered five out of 19 contracts in previous offshore auctions in July and September.

The assets on offer include mature onshore fields that have combined proven and probable reserves of about 49 million barrels of oil equivalent. According to Mexican brokerage Accival’s estimates, new crude production in the fields can reach 126,000 barrels per day (bpd) by 2018 and generate $200 million in state revenues. Mexico’s National Commission of Hydrocarbons has a more conservative estimate for the 25 onshore fields at about 36,000 bpd.

Thirty-two companies and 18 consortiums bid for the properties. Mexico’s new contractual terms, introduced in mid-2015 after the country’s energy reform saw an end to state-owned Pemex’s oil monopoly, omitted the requirement that companies give the government a portion of oil and gas produced from the fields. Drilling companies now pay the government cash royalty.

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