Oil and Gas

UPDATE 1-Mexico's Pemex to cut stake in 1st deep-water venture

(Writes through with detail on modifications, quote from lawyer)

MEXICO CITY, Sept 27 (Reuters) - Mexican state oil firm Pemex will cut its stake in its first deep-water joint venture with private operators, the national oil regulator said on Tuesday, agreeing to modify the terms of the planned tie-up to allay industry concerns.

Global oil majors are expected to bid in the December auction to help Pemex develop the Trion light oil field in the Perdido Fold Belt, a key stage in the government’s drive to open up Mexico’s oil industry to private investment.

Industry officials, however, had privately expressed concerns that the terms of the tie-up were too generous to Pemex, prompting the company to request changes that the national oil regulator approved on Tuesday evening.

Pemex will now cut its planned stake to 40 percent from 45 percent for the Trion field, which lies south of Mexico’s maritime border with the United States, said CNH, as the regulator is known.

To reverse years of declining output, Mexico opened up the oil industry to private capital in 2013, stripping Pemex of a decades-long monopoly. However, the fall in oil prices has complicated Mexico’s attempt to lure investors.

The Trion modifications also mean that of the two private operators in the deep-water venture, one must now take a minimum 30 percent stake and the other at least 10 percent, the regulator said.

Previously, the stakes for the initial two investors had been set in fixed ranges of 30-40 percent and 10-25 percent.

It was also agreed that Pemex could only seek the removal of an operator if the regulator gave notice of transgressions that were not rectified by the company in question.

It was agreed as well that Pemex would be liable for any pre-existing damage at the site, while the company’s rights in cases of non-compliance were pared back to put it on a more level-playing field with the private operators, CNH said.

“The word we received (from the industry) was that the agreement was lop-sided and protected (Pemex) too much,” Pemex’s lawyer Jorge Eduardo Kim Villatoro said in a session with the regulator.

Furthermore, the seat of arbitration for disputes was moved to Calgary, Canada, instead of Mexico, as had been stipulated. (Reporting by Adriana Barrera; Editing by Dave Graham, Leslie Adler and Tom Hogue)