Pemex set to award Arenque rights

by on July 31, 2012 1:43 am BST

Last month’s auction of private contracts failed to award the Arenque oilfield, located in shallow waters off Tamaulipas state in eastern Mexico, and the largest block up for grabs at the time.

“We are going to invite the companies that participated before and based on the price they offer, we will assign the contract directly,” the director of Pemex Exploration & Production, Carlos Morales, said in an interview with Reuters.

Morales added that Pemex would revise the price per barrel it is willing to pay to develop the area.

All bids for Arenque made during the 19 June auction were significantly higher than the $7.25 per barrel Pemex had set as its maximum rate, Reuters reported.

Four companies – Dragados Offshore de Mexico, Burgos Oil Services, SAIMEXICANA and Petrofac Mexico – placed bids ranging from $10.78 to $24.00 on Arenque last month.

Mexico launched the new incentive-based contracts after Congress passed a 2008 energy reform to lure private capital into the country’s lumbering energy sector.

Boosting oil production is critical after Mexico lost nearly a quarter of its capacity between 2004 and 2009 due to the rapid aging of its largest oilfields and a lack of investment in exploration for new deposits.

Since then, oil output has stabilized at about 2.54 million barrels per day, but a renewed decline is a worrying prospect for the government. Oil revenues fund about a third of the federal budget.

The first contracts for mature fields further south were announced last year and are now in operation.

Morales confirmed in his interview with Reuters that a planned third round of contracts later this year will solicit bids to develop the geologically complicated Chicontepec area, the location of 40% of Mexico’s oil reserves.

Morales said Pemex expects to auction off the Chicontepec contracts around November.