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Next Mexico deepwater oil tender may draw from three Gulf basins
July 17, 2017 / 11:24 PM / 3 months ago

Next Mexico deepwater oil tender may draw from three Gulf basins

Juan Carlos Zepeda (C), head of Mexico's national hydrocarbons commission (CNH), speaks to the media beside Aldo Flores Quiroga (L), a deputy energy minister, and Miguel Messmacher, a deputy finance minister, during a news conference after an auction of offshore oil and gas blocks, in Mexico City, Mexico July 12, 2017. REUTERS/Henry Romero

MEXICO CITY (Reuters) - Mexico will announce later this week the bid terms and blocks up for grabs in its next deepwater oil tender, which may include the first areas from the Cordilleras Mexicanas basin, a senior official said on Monday.

The Cordilleras Mexicanas deepwater basin is home to national oil company Pemex’s Lakach natural gas project and located east of the Gulf Coast port of Veracruz.

Cordilleras Mexicanas is viewed by the oil and gas industry as a major source of untapped potential.

An auction would be the first time the basin has been made available to international oil majors, which for decades have profitably developed other fields in U.S. waters nearby.

Mexico’s first deepwater oil auction last December included blocks from the Perdido Fold Belt straddling the U.S.-Mexico maritime border, and the Salina basin further to the south.

For the next deepwater round, the energy ministry is also looking at areas in the Cordilleras Mexicanas basin, said Juan Carlos Zepeda, head of the National Hydrocarbons Commission (CNH), the oil regulator that runs the auctions.

“The auction might include blocks from (all) three basins,” he said.

The auction will likely take place in January, although no fixed date has yet been set, and will differ from the last deepwater tender by including a maximum additional royalty that interested bidders can offer to win development rights.

Last month, the finance ministry said future oil auctions would include both minimum and maximum additional royalties, and in the case of a tie, a cash bond would be used to break it.

Such cash bonds alone raised $88 million last week as several of the 21 onshore blocks awarded ended up tied.

After the next deepwater round, the following auction will include so-called non-conventional or shale blocks, which would mark another first, Zepeda said.

The calendar and bid terms of the non-conventional auction will likely be announced later this summer, he added.

Last week, Italy’s Eni said it had raised the estimate for what is in its Amoca block, won in 2015, to up to 1 billion barrels of oil equivalent and planned to speed up development so that production could come online as soon as 2019.

Zepeda estimated that Eni’s accelerated timeline could involve investment of some $1.1 billion, and expected the firm to submit its development plan “maybe within the next month.”

A 2013 constitutional energy reform ended Pemex’s decades-long exploration and production monopoly, paving the way for seven oil auctions since then.

Editing by Dave Graham and Phil Berlowitz

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