Mexico awards 16 shallow water blocks

Mexico on Tuesday awarded 16 shallow water blocks to twelve bidders. Acreage was offered in oil provinces in shallow waters in the Gulf of Mexico: Burgos Tampico-Misantla-Veracruz, and the Southeast Basin.

According to the country’s oil and gas regulator CNH, the tendered contracts represent an associated investment of approximately $8.6 billion dollars over the contract period.

CNH said that 18 bidders took part in the bidding round, with 16 contracts tendered to 12 bidders.

“The results confirm the interest of world-class, international companies in investing in Mexico, strengthening and making more competitive the country’s hydrocarbons sector,” CNH said in a statement on Wednesday.

Mexico had offered 35 blocks in total. The companies filed their bids individually or in a consortium.

Out of 14 blocks offered in the Burgos area, companies bid only for four blocks. Repsol won bids for two blocks, and Premier Oil won two blocks in the area.

Thirteen blocks were offered in the Tampico Misantla and Veracruz area, with four blocks receiving bids. One block was awarded to Capricorn & Citla, two blocks to the consortium Pemex, DEA & CEPSA and one block to Pemex & CEPSA . Nine blocks in the area received no bids.

The Southeast basin attracted the biggest interest in terms of blocks offered, as all the blocks that were on offer received more than one bid, with one of the blocks getting as much as seven bids.

The area had eight blocks available for bidding. Companies that got their hands on these blocks are Eni & Lukoil, Pemex, DEA, Premier and Sapura consortium, Pan American Energy, two blocks for Total and Pemex JV, Total, BP & Pan American consortium, and Shell &Pemex consortium.

Given that the tendered contracts are shared production contracts, they were awarded on the basis of the percentage of operating profit offered to the State, the additional investment and the amount of cash bonus offered by the participants.

On average, the government percentage offered in the winning bids was 45.8%. The winning bidders agreed to drill 9 additional wells and to pay cash bonuses of a total of $124 million dollars, CNH said.

Three blocks for DEA

Germany’s DEA Deutsche Erdoel was awarded two blocks with its partners Pemex Exploration and Production and CEPSA and one block jointly with its partners Sapura E&P and Premier Oil. In all three blocks, the affiliate of the German E&P company DEA, Deutsche Erdoel Mexico will be the operator.

Maria Moraeus Hanssen, CEO of DEA Deutsche Erdoel AG.”We are very pleased with the awards in this highly competitive bid round 3.1. The blocks we won are an excellent fit to our plans in Mexico. The country plays an important role in our global growth strategy. We recently entered the Mexican market and are one of the first international operator of oil production in the country. Now, we expand our exploration portfolio with promising opportunities,” said

Deutsche Erdoel Mexico won Block 16 and 17 (both with partners Pemex Exploration and Production and CEPSA) in the Tampico-Misantla Basin and Block 30 (with partners Sapura E&P and Premier Oil) in the Sureste Basin.

“The bid round results are a great success, giving us access to highly prolific basins,” said Juan Manuel Delgado, President of Deutsche Erdoel Mexico. “Both, the Tampico-Misantla and the Sureste Basin offer significant undiscovered resource potential. Block 30 is in vicinity of recent large oil discoveries. Block 16 and 17 are located in the immediate vicinity of Block 2, where we already have exploration activities as partner with Pemex. The blocks are a strong complement to our portfolio. We now look forward to start the exploration work together with our partners,” Delgado added.

Eni expands foothold

Italy’s Eni, which already has offshore assets in Mexico, this time teamed up with Russia’s Lukoil,  getting rights to Block 28, located in the medium-deep waters of the Cuenca Salina Basin, offshore Mexico.

“This allows Eni to build up and consolidate a new core area with significant operational synergies in the country,” Eni said. The Italian company will be the Operator of the license with a 75% stake in the joint venture, while Lukoil has the remaining 25%.

Eni recently discovered approximately 2 billion barrels of hydrocarbon in place in the Cuenca Salina Basin offshore Mexico, where it holds a 100% stake in Area 1. The company has already submitted to the approval of the local authorities the Development Plan (PoD) to exploit the discovered resources. Eni also is Operator of four other exploration and production blocks in the Cuenca Salina Basin.