Mexico wins big at second oil and gas auction

The country expects to see as much as $3.1 billion of new investments as a result of the successful auction of three exploration and extraction blocks.

After failing in July to drum up the hoped-for response at Mexico's first oil and gas auction since last year's market liberalisation , hydrocarbon exploration and extraction blocks drew a robust market response at the second international tender held on Wednesday.

Fifteen international companies submitted offers in the auction that was led by the National Hydrocarbons Commission and supported by the Ministry of Energy (SENER) and the Secretariat of Public Finance, according to a SENER release. Of the five exploration and extraction blocks up for auction, three were awarded. 

SENER anticipates the blocks will generate roughly $3.1 billion in investment over the next 25 years with government profit sharing between 82 and 90 percent depending on the level of endeavours' commercial success. 

Italian energy company Eni International won the most highly contested first block, rising above eight other bidders to provide a pre-tax government share of 83.75 percent and total state participation in profits set between 90 and 92 percent. Expected total investment in the block is roughly $1.144 billion with an expected total production of 24.2 million barrels of oil equivalent (boe). A newly established ENI Mexico company will develop the block, which includes the Amoca, Mizton, and Tecoalli fields, according to a company statement. Some experts have estimated that the fields contained within the block could hold as much as 700 million barrels of oil (bbl). 

A consortium including Argentine firm Pan American Energy, a subsidiary of Bridas Corp, and E&P Hidrocarburos y Servicios beat out four other bidders to take the second block that contained the Hokchi field by offering a 70 percent government share and between 82 and 88 percent government participation in profits. Expected investment was pegged at $985 million and expected production of 26.1 million boe.

Another consortium comprised of Houston, Texas-based Fieldwood Energy and Mexico's Petrobal bid alone to win block four, which contained the Ichalkil and Pokoch fields, offering 75.91 percent government share with between 85.3 and 88.3 percent profit participation.  Total expected investment is roughly $1 billion and expected production is 11.5 million boe.  

Mexico plans to host its next oil and gas auction for onshore fields in December, and another next year for deep water blocks.