Pemex Standards in English took on new importance as a variety of international bidders took on Pemex at auction this past year. Though bidding got off to a rocky start in July, with only two of 14 blocks actually sold, by September, Pemex seemed to have gotten some of the kinks worked out of their new auctioning procedure and sales were much more up to expectations.
July’s two blocks were purchased by a new Mexico City company called Sierra Oil and Gas, one of the only bidders willing to put up with the too-short lead time and basic lack of geological information on offer in July. Still, as the fields have already been discovered, the lack of risk is just one more incentive.
Come September, Pemex – and presumably the powers that be in the Mexican government – had come up with adequate information for the auction take place in a more transparent process, with enough time to actually look things over and information about the lowest acceptable bids that the government would consider. September bidding was widely considered a much more successful sale. Nine of fourteen pre-qualified bidders actually made nods towards the available fields, all off the coasts of the states of Campeche and Tabasco.
Among the biggest buyers were the Italian group, Eni, marking their first entry into the Mexico marketplace. Eni offered 83.75 percent back to Pemex for access to the Amoca, Mizton and Tecoalli fields, all shallow water fields. At just about 21 square miles, the fields are holding a combined 107 million barrels of light oil and 69 bcf of natural gas. That’s in Pliocene sand and beneath 33 meters of water.
Block four in the bidding went to a consortium led by Houston-based Fieldwood Energy and Mexican start-up, Petrobal, part of Grupo Bal the silver mining outfit. The consortium purchased rights to five more shallow water blocks in the Ichalkil and Pokoch fields. The Fieldwood/Petrobal bid offered the Mexican government 74 percent participation in the project.
Finally, Argentina’s Pan American Energy led another group that included Mexico’s E&P Hidrocarburos y Servicios. They purchased rights to some 15.5 square miles called the Hokchi field. They’re expecting 61 million barrels of light oil and another 29 bcf of natural gas under just 28 meters of water.
These are just three of the most important private contracts signed since the far more successful bidding took place at the end of September. Pemex undoubtedly has a ways to go to fix up its refining capacity and get a hold on all of its outstanding pension obligations. But these auctions do represent an important step in the right direction at least for getting a handle on working with private and non-Mexican companies.
Production on any of the fields mentioned above could begin as early as 2018. But round one of the auctions is still promising bids for onshore reserves, deep-water reserves and some non-conventional fields too including some shale-rock natural gas.