Mexico plans to publish its technical bidding requirements in November, outlining logistics for the first upstream bid round, according to hydrocarbon officials visiting Houston to update the oil and gas industry on the country's progress in opening up its assets to non-Mexican companies.
On Dec. 21, 2013, Mexico's sweeping energy reform became law, triggering a revamping of that country's oil, gas, and electric industries. During Round One, Mexico will offer licenses and production-sharing contracts, ending a decades-old monopoly held by Petroleos Mexicanos (Pemex).
Maria de Lourdes Melgar Palacios, Mexico's undersecretary of hydrocarbons, said the country plans to open its areas in a bidding sequence starting with the shallow water. After that, bidding will involve extra-heavy oil, unconventional assets, and deep water.
Lourdes Melgar, who was appointed to her current position earlier this year (OGJ Online, Feb. 7, 2014), emphasized that hydrocarbons in the subsoil still belong to Mexico, which is opening up exploration and production to free-market access and competition between Pemex, a state-owned enterprise, and private companies.
"Pemex will have to compete," she told an Oct. 20 session hosted by the University of Texas and the Greater Houston Partnership. "The development of our areas will be done through contracts. Our way to award the contracts is through a bidding process."
During the now-completed Round Zero, the Mexico government awarded certain assets to Pemex and determined which assets are open to competitive bidding. Pemex will be allowed to participate in bid rounds and will be allowed to partner with companies from outside Mexico (OGJ Online, Sept. 23, 2014).
Blocks to be offered
The first round is expected to involve 169 blocks with most of those blocks involving crude oil ranging from light, sweet crude to heavy oil, she said. The initial round will include some natural gas offshore and in unconventional plays.
The first round will include areas where infrastructure already exists such as roads and pipelines. Of the blocks on offer, 109 will be exploratory, Mexico's energy officials said.
"Our round is quite diverse," Melgar said. "We tried to put areas that have different types of geology and areas that will attract different types of players."
Juan Carlos Zepeda Molina, president commissioner of the National Hydrocarbons Commission, said companies will be able to start the process of prequalifying next month to participate in the bid round. Prequalification will end in January 2015 and then data rooms will be established.
Prequalification is necessary to access the data rooms, which will be available both online and in Mexico. He expects bidding and awarding for shallow-water areas to take place in May 2015.
The first round is being drafted very comprehensively and will include areas that Pemex already has been developing.
"We are following an approach offering clusters of development and fields around Pemex infrastructure," he said. "The approach we are using is we are making packages, the first one will be a shallow-water package."
Melgar said Mexico was very careful in its local content requirement so as to encourage private companies to participate, particularly in deepwater projects.