Pemex gains two new partners for onshore tie-ups
Two foreign oilcompanies on Wednesday won the rights to partner with Mexico’s oilcompany Pemex on two onshore blocks, a first since landmark energy reform, while a third offshore area received no bids.
The auction was run by the National HydrocarbonsCommission, the industry regulator, and marks only the second time partnership rights for Pemex projects have been made available.
Egypt’s Cheiron Holdings Limited and Germany’s DEA Deutsche Erdoel won the rights to partner with PetróleosMexicanos, commonly known as Pemex, on its Cardenas-Mora and Ogarrio blocks, respectively, which officials touted as a way to quickly boost production via new investment.
“This underscores the beauty of the energy reform,” said Pemex CEO Jose Antonio Gonzalez Anaya shortly after the auction.
“Before, we would have to invest everything and now we only have to pay half and we receive a payment to be able to meet those costs,” he said.
Mexico’s 2013 constitutional reform ended Pemex’s decades-long production monopoly. It also allowed the company to enter into joint ventures with equity partners for the first time in a bid to help reverse more than a dozen years of declining output.
The onshore Cardenas-Mora area, a 168 km2 block in southern Tabasco state is believed to contain some 93-million barrels of mostly light crude. Pemex will receive a $125-million payment from Cheiron reflecting the company’s past investments in the area, Pemex said in a statement.
Cheiron also agreed to pay Pemex another $41-million on top of the 13% additional royalty it bid for the partnerships rights, Pemex said.
The Cardenas-Mora project is seen requiring a total of $1.1-billion to successfully develop over the life of the contract, while the Ogarrio project is seen requiring some $490-million, according to Pemex estimates.
“We’re extremely happy, and we’re looking forward to this opportunity,” said Shady Kabel, Cheiron’s country manager for Mexico.
In the case of the Ogarrio area, a 60-square mile (156 sq km) field also in Tabasco estimated to contain 54-million barrels in mostly light crude, Pemex will receive $190-million from DEA Deutsche, Pemex said in a statement.
The German company also offered to pay a record-setting $213.9-million for the partnership rights on top of the 13% additional royalty, a sum that will be divided between Pemexand the government’s petroleum fund, said Martin Alvarez, an official at the National HydrocarbonsCommission.