Mexico announces plans for deepwater auction

Offshore staff

MEXICO CITY – In mid-December, Mexico’s Energy Ministry announced plans for the highly anticipated tender of deepwater exploration blocks in the Gulf of Mexico, according to a report in the Wall Street Journal.

The ministry said the government’s fourth oil auction (including two shallow-water auctions and one onshore auction) will be announced by 3Q 2016 and held within 90 days of that announcement. Officials had been promising details on the deepwater auction over the past several weeks, prompting industry speculation on the holdup.

Ten blocks will be offered, the ministry said, including four in the Perdido area of the Gulf near the US maritime boundary. If commercial quantities of oil and gas are found on the Mexican side, the government would employ a license contract model that is similar to a concession used in other markets. Mexico also allows production-sharing and profit-sharing contracts, although industry generally prefers licenses or concessions because of their relative simplicity to administer.

“Taking into account the circumstances of high volatility in the international oil market, and with the purpose of assuring the best conditions for the government, the [Energy Ministry] decided to include only the deepwater areas of the Gulf,” the ministry said in a statement.

The deepwater announcement came a day after the National Hydrocarbons Commission, the government’s oil regulator, successfully auctioned off all 25 onshore contracts up for bid.


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