Mexico eases Round One contract terms

Mexico’s oil regulators will ease the terms of the second phase of the Round One auction after previous rules discouraged investors, leading to a bust in the first phase.

Only two of the 14 offshore oilfields were awarded in last month’s auction. The government had targeted five. The previous rules required a $6-million corporate guarantee and a letter of credit for the amount needed to complete its work programme.

Mexico’s oil regulator, the National Hydrocarbons Commission, will implement changes ahead of the next auction, which is set to be held at the end of September for five blocks of offshore oilfields containing proven reserves.

The changes included allowing interested bidders more time and flexibility by extending the deadline to apply and find financial partners. The oil regulator also relaxed the corporate guarantee required for each bidder, which has been changed to 18 times the value of the minimum work required of each contract. The letter of credit has been reduced to 50 percent of a company or consortium’s work programme.

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