Mexico Sweetens Terms for Coming Auction of Oil Fields
September 14 2015 - 7:50PM
Dow Jones News
MEXICO CITY—Mexico sweetened the terms for its September auction
of oil fields, setting minimum bids Monday that are generally lower
than for the exploratory blocks offered in July, which generated
little interest given the weak price environment for oil and
gas.
The Finance Ministry said the minimum bids for five groups of
shallow-water fields guarantee a fair share of profits for the
government while keeping the energy sector competitive for private
capital. The ministry said the government's overall take of the oil
profits, after royalties and taxes, will be more than half.
Industry analysts said the government is taking the right steps
to make this month's auction more successful than July's. Oil
regulators had already made some changes to the contract terms for
the September auction to generate greater interest.
Among the 14 companies and consortiums qualified to bid in the
auction are major oil companies like Chevron Corp. and Royal Dutch
Shell PLC, along with Mexican upstarts Carso Oil & Gas and
Petrobal, according to the National Hydrocarbons Commission.
"I think a very important thing to notice here is that the
government is willing to show flexibility going forward," said
Pablo Zá rate of FTI Consulting's office in Mexico City. "This is a
step in the right direction, but it's not necessarily all that's
needed," he added, pointing out that some contract terms are still
considered burdensome given low oil prices.
The minimum bids set by the ministry run from 30.2% for a
grouping of two fields known as Misió n and Nak, to 35.9% for the
lone field of Hokchi. Bids are due Sept. 30. Bids are submitted in
sealed envelopes and can't be changed.
Mexico opened up its oil sector to private and foreign companies
last year after eight decades of control by former monopoly Petró
leos Mexicanos. The July auction was the first since the energy
overhaul, but only two blocks out of 14 were awarded. Mexican
authorities had hoped to award at least four or five blocks.
In that tender, the government didn't unveil the minimum bids
before the auction, and a number of bids fell just short of the
minimum, which for most of the blocks was 40% and for the rest was
set at 25%.
In the wake of that poor result, oil regulators said they would
announce the minimum bids before the auction, and set them based on
oil prices.
José Valera, an energy lawyer at Mayer Brown in Houston, said
the government has followed through on its promise, and now it is
up to the oil companies to run production models for the fields up
for auction and decide whether to bid.
"I think it is fair in terms of percentage and advanced notice,"
said Mr. Valera. "Overall, I think the government is helping itself
by putting those numbers out."
Write to Laurence Iliff at laurence.iliff@wsj.com
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(END) Dow Jones Newswires
September 14, 2015 19:35 ET (23:35 GMT)
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