Investment prospects in hydrocarbon exploration and extraction contracts
To date, 75 contracts have been signed, and 19 from Round 2.4 and 16 from Round 3.1 are in the process of being signed, which would bring the total to 110 contracts for exploration and extraction activities in Mexico.
Furthermore, in the coming months, the National Hydrocarbons Commission (CNH) will be holding its 15th bidding round, offering 46 conventional and unconventional onshore fields. This is a significant bidding round due to the potential of the contract areas up for tender, especially the nine unconventional resource fields, which, according to data from the Ministry of Energy, hold three times the potential of the awarded onshore areas.
Additionally, the search for partners for Pemex is underway for seven onshore areas through bidding round CNH-A-C6-7 Partnerships/2018, and the winners will be announced next October. The above allows us to affirm that the Energy Reform in our country has been successful, as it has managed to attract not only Mexican investors but also foreign ones. These companies come from more than 18 countries, including Australia, Norway, Italy, France, China, Colombia, the United States, Malaysia, and Germany, and have committed to an investment of approximately US$153 billion.
Most of the investment is concentrated in deepwater drilling, as this area requires large-scale infrastructure, cutting-edge technology, specialized personnel and equipment, and advanced safety systems.
All of this investment will translate into the development of new businesses (small and medium-sized enterprises), job creation, and the establishment of economic centers in specific geographic areas, such as Tamaulipas, Veracruz, and Tabasco, where most of the exploration and extraction fields are located. Attracting investment is the best indicator of the success of the Energy Reform, but this does not mean it is fully consolidated. To achieve that point, Mexico needs to be a competitive country, which implies adopting international best practices to remain attractive to investors.
In this regard, regulations concerning industrial safety, operational safety, and environmental protection play a crucial role in creating a safe and clean hydrocarbon industry.
To this end, Mexican regulatory bodies have developed regulations that aim to establish the highest safety standards, ensuring that exploration and extraction contracts proceed smoothly and minimizing the occurrence of accidents. These accidents, in addition to the potential consequences for third parties, generally involve significant financial outlays for the company, not to mention the indirect consequences such as lost productivity, non-compliance with legal obligations, lawsuits, reputational damage, and so on.
In this regard, Mexican authorities wisely adopted one of the best international practices by regulating financial guarantees, specifically liability and environmental insurance, well control, property damage, and personal injury insurance, to ensure the availability of the necessary financial resources to repair any damage caused by the activities of oil operators.
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