Mexico auctions two-thirds of blocks in shallow water oil tender

“Italy’s Eni, Colombia’s Ecopetrol and Capricorn Energy, a unit of Edinburgh-based Cairn Energy, were among the companies at the forefront of the bidding for 15 blocks in the southern Gulf of Mexico.”

“Ten of the 15 blocks were taken up in the auction.”

“”This is a great result,” Juan Carlos Zepeda, head of the oil industry regulator known as the CNH, told a news conference.”

“Eni took one of the blocks by itself and two in consortium with other companies. One comprised Capricorn and Mexican oil firm Citla Energy, the other was with Citla alone.”

“Citla also partnered with Capricorn to win another block, edging out Eni in a tie-breaker after a hotly contested bid for the ninth block in which both made the maximum possible offer.

“Russia’s Lukoil also took a block, as did a tie-up between France’s Total SA and Royal Dutch Shell Plc.”

“The potential output from the blocks auctioned could total 170,000 barrels per day of crude equivalent, and investments could eventually reach $8.2 billion, Energy Minister Pedro Joaquin Coldwell said.”

“The auction was the latest step in Mexico’s bid to attract more private investment to the industry after Congress changed the constitution in late 2013 to end the 75-year production and exploration monopoly of state oil company Pemex.”

“Pemex won two blocks in Monday’s bidding: one in consortium with Germany’s Deutsche Erdoel AG, and another with Ecopetrol. The Colombian company also won a block with PC Carigali, a unit of Malaysian oil firm Petronas.”

“Spain’s Repsol combined with the company Sierra Perote to win another block in the southern Gulf of Mexico. Top government officials said before the auction they were hopeful Mexico would assign at least one-third to 40 percent of the blocks in the shallow water round.”

“The auction was the fifth since the energy reform, including one deep water and two previous shallow water tenders. The previous ones yielded 39 contracts with forecast investment over their lifespan of $48.8 billion, according to the government.”

“Mexico hopes opening the energy sector will help reverse years of declining crude output. Total crude production in Mexico has fallen to 2.01 million barrels per day from a peak of 3.38 million in 2004.”