BEGINS A NEW ERA IN THE MEXICO’S ENERGY INDUSTRY

Two of the 14 shallow-water Gulf of Mexico blocks on offer in the first phase of Mexico’s historic Round One oil auction were awarded, both to a consortium featuring a domestic company.

Mexico is starting small with its offer of shallow-water fields and onshore blocks this year and saving the big prizes – deep-water fields in the Gulf of Mexico – for later tenders.

Both of the blocks awarded on Wednesday were won by a consortium made up of Mexico’s Sierra Oil & Gas, Houston-based Talos Energy and Britain’s Premier Oil plc.

One of them covers a 194-sq.-kilometer (75-sq.-mile) area off the coast of the Gulf coast state of Veracruz and is projected to contain light oil and dry gas.

The other covers a 465-sq.-kilometer (180-sq.-mile) area off the Gulf coast state of Tabasco and was contested by four other bidders: Norway’s Statoil, U.S.-based Hunt Overseas Oil Company, Argentina’s E&P Hidrocarburos y Servicios and a consortium made up of Italy’s ENI International and U.S.-based CASA Exploration.

The other 12 blocks either received no bids or had offers that were below the minimum 40 percent of pre-tax profits demanded by Mexico’s Finance Secretariat.

Eighteen individual companies and seven consortia had been pre-qualified for Round One’s first phase, but only nine registered on Wednesday and only seven submitted bids for at least one of the blocks.

The initial batch of 14 Gulf of Mexico blocks – located off the coasts of Veracruz, Tabasco and Campeche states – were placed on offer in the first of five phases of Round One, which comprises a total of 169 onshore and offshore blocks.

The second phase of Round One, in which nine shallow-water fields will be on offer, is scheduled to take place on Sept. 30, while the third phase consisting of 26 onshore blocks is to be held on Dec. 15.

The final two phases of Round One still have no established timetable.

Pemex, which obtained 83 percent of Mexico’s proven and probable reserves and 21 percent of its potential resources in a so-called «Zero Round» of non-competitive bidding last year, said last week it would not participate in the initial phase of Round One.

Mexico’s government is looking to the energy overhaul to attract tens of billions of dollars in investment and reverse a roughly 30 percent decline in Mexico’s oil output, which peaked at 3.38 million barrels per day (bpd) in 2004 and currently stands at roughly 2.3 million bpd.