Mexico awards 10 of 15 shallow-water blocks in latest bid round

Mexico’s Round 2.1, held June 19, included shallow-water blocks in the Tampico-Misantla, Veracruz, and Southeast basin areas along the country’s Gulf Coast.

Twenty companies and 16 joint ventures from 15 countries took part in the bidding. Eni Mexico and Lukoil PJSC were two individual operators awarded offshore acreage.

Of the 10 blocks awarded, nine of these came with committed exploration wells. Mexico Energy Secretary Pedro Joaquin Coldwell said the country expects to reach 170,000 boe/d if the blocks prove successful.

The country’s most recent round fared better than its Round 1 in July 2015, which awarded only two shallow water blocks of 14 that were offered (OGJ Online, July 27, 2015). The country has since improved its contract terms and the bidding process to attract more international companies.

Only one of four blocks offered in the Tampico-Misantla Area received bids. Area 2 is 549 sq km in 20-250 m of water, consisting of light oil and natural gas. Joint-venture partners DEA Deutsche Erdoel AG and Petroleos Mexicanos SA (Pemex) were awarded the block with an economic proposal of 69.5% and an additional 1% investment factor.

Areas 1, 3, and 4 in the Tampico-Misantla basin received no bids. Area 5 in the Veracruz basin also received no bids.

Southeast basin activity

Mexico’s Southeast basin generated most of the bidding activity.

Mexico’s National Hydrocarbons Commission (CNH) awarded Ecopetrol SA the 559-sq-km Area 6, along with its partner Malaysia’s state-owned Petronas subsidiary PC Carigali Mexico SA. The firms offered the government 65.19% of operating profits with an additional 1% investment factor. Area 6 lies in 30-80 m of water and consists of light oil.

Area 8 in the Southeast basin covers 586 sq km, and Ecopetrol partnered with Pemex offering 20.10% with no additional investment factor. Ecopetrol and Pemex provided the only bid for Block 8 in this round. The block is in 100-500 m of water, consisting of light oil.

Ecopetrol said in a press release it holds 50% interest in both blocks with Petronas holding 50% on Area 6 and Pemex with 50% on Area 8.

Cairn Energy PLC picked up two licenses covering 1,100 sq km in the Southeast basin through its wholly owned subsidiary Capricorn Energy Ltd. Both blocks are 50 km offshore.

Cairn holds 30% interest in the Eni SPA-operated Block 7. Eni holds 45% interest with Citla holding the remaining 25%. The bid includes state participation of 75% and an additional 1.5% investment factor. The block is in 150-520 m of water and consists of light oil.

Cairn acquired a 65% operating interest in Block 9 with partner Citla Energy SAPI de CV holding 35%. Cairn said it anticipates exploration drilling to commence in 2019-20 for both blocks. Block 9 is 562 sq km at 80-550 m of water.

In addition to its Block 7 interest, Eni was awarded two other blocks. The company will operate Block 10 with 100% interest.

Eni already holds a 100% stake in Area 1 in the Southeast basin, where the exploration and appraisal campaign is successfully ongoing and a fast-track plan for the development of the Amoca field is being finalized, with plans for an early production phase (OGJ Online, Mar. 24, 2017). Blocks 10 and 14 are joined to Area 1 and Eni expects to build up a new core area in the case of a successful exploration campaign.