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Mexico's Pemex names bidders for Chicontepec oil auction
June 19, 2013 / 12:41 AM / 4 years ago

Mexico's Pemex names bidders for Chicontepec oil auction

MEXICO CITY, June 18 (Reuters) - Spanish oil company Repsol and China’s Sinopec are among the 16 energy firms and consortia that have qualified for next month’s auction of six blocks in Mexico’s Chicontepec basin, state-run oil monopoly Pemex said on Tuesday.

The Chicontepec basin, discovered more than 80 years ago, is located in the east-central states of Veracruz and Puebla and is home to about 40 percent of Mexico’s certified hydrocarbon reserves.

The six blocks up for auction - Pitepec, Amatitlan, Soledad, Miquetla, Humapa and Miahuapan - make up about 15 percent of the basin’s total reserves, or about 3.2 billion barrels of crude equivalent (bce), according to Pemex data.

The July 11 auction will mark the third round of the country’s fee-per-barrel private contracting scheme, fruit of a 2008 reform aimed at revitalizing aging oil fields.

While Mexico’s constitution mandates that only the state can own and extract oil and gas resources, President Enrique Pena Nieto has promised a reform to attract new investments from private oil companies aimed at boosting lagging production.

While details of the reform have yet to be revealed, a formal proposal is expected by September.

Repsol’s Mexican unit is set to compete for all six blocks, while the local arm of Sinopec will bid on two, Miquetla and Pitepec, Pemex said.

The Miquetla block holds the most proven, probable and possible (3P) reserves among the blocks, or about 1 billion bce.

Both Schlumberger, the world’s biggest oilfield services company, and Halliburton, the second biggest, will also compete for all six blocks up for grabs.

While international oil majors BP and Royal Dutch Shell both purchased project specifications, neither ultimately sought to qualify for the auction.

Last year, Chicontepec produced an average of 74,800 barrels per day (bpd).

But despite heavy investment, Pemex has failed to meet previous production forecasts at the geologically complicated basin, where millions of barrels of oil are scattered across many small deposits, a feature that makes production costly and slow.

Mexico is the world’s No. 7 oil producer but output has stagnated in recent years, dropping by roughly a quarter since hitting a peak of 3.4 million bpd in 2004.

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