Investors await Mexico’s Round One bid terms

Investors and oil companies expect Mexico to release bid terms soon for its upstream bid round, Mayer Brown energy partner Dallas Parker and associate Gabriel Salinas said in a recent interview with Oil & Gas Journal.

Round One will include 169 blocks total with 109 exploration blocks and 60 production blocks. The tender is expected to commence in first-quarter 2015, and contracts are expected to be awarded next year, starting in May and ending in September.

Parker noted Mexico plans five different phases of Round One, starting with shallow-water blocks. Data rooms are scheduled to be established in January.

“Shallow water is the most developed area,” Parker said. Petroleos Mexicanos (Pemex) was allowed to keep much of the shallow-water acreage during the now-completed Round Zero, but some mature fields remain available to outside investors, Parker said.

Overall, Parker sees Mexico as first opening up the best-known and most-developed areas.

“I haven’t even heard any rumors,” Parker said of the qualification requirements for bidders. “Optimism seems to be building, but the fine print is going to tell the final story. Every indication is that Mexico is doing this responsibly… They are serious about this, and they recognize Mexico is not the only game in town.”

Energy reform legislation passed last summer gives energy development priority in land-use disputes (OGJ Online, Aug. 7, 2014).

Land controversies threaten to impede Mexico’s opening of oil and gas projects to international investment, said an issue brief from the Baker Institute for Public Policy at Rice University (OGJ Online, Nov. 5, 2014).

Parker noted it’s impossible to tell at this point if there will be any backlash from the energy reform within Mexico.

“Land rights are always controversial,” Parker said. “Within the population of Mexico, there are some pockets that still need to be convinced” that the reform will be beneficial for them and their nation.

Salinas said 75% of Mexico’s federal lawmakers were aligned behind the energy reform.

Contact Paula Dittrick at paulad@ogjonline.com.

*Paula Dittrick is editor of OGJ's Unconventional Oil & Gas Report.

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