December 11, 2014 / 8:01 PM / 5 years ago

UPDATE 1-Mexico limits shallow-water bids in energy opening, no word on tax

(Adds details on new rules)

By David Alire Garcia and Adriana Barrera

MEXICO CITY, Dec 11 (Reuters) - Mexico said on Thursday it would cap the number of shallow water contracts companies can bid for as it outlined the tender for the first leg of the country’s energy sector opening, but gave on word on how much tax the government will take.

Following a sweeping energy reform that ended a 75-year state monopoly, Mexico’s National Hydrocarbons Commission (NHC) on Thursday revealed key details of the process to a packed audience including executives from Chevron Corp, Exxon Mobil Corp and Ecopetrol SA.

The first contacts are for 14 shallow-water exploration and production (E&P) areas with significant deposits of light crude oil and will pay winning firms with a share of output from projects that Mexican regulators said on Wednesday feature average production costs of about $20 per barrel.

Companies or consortia will be limited to bidding on up to five shallow-water areas, the NHC said, and will have to show a track record in offshore oil exploration and production.

No company can take part in more than one consortium in the first round, and each company or group is limited to bidding on five contract areas. Company executives said those limitations were in line with international norms.

The contracts, which will be tendered to private oil companies outright or in association with state-owned oil company Pemex, will be for 25 years each with a possible extension of up to 10 years, the regulator added.

Companies seeking to participate in the tenders must have operated at least one offshore E&P project or have investments totaling at least $1 billion worth of them.

Prospective bidders must also have either operated at least one offshore E&P project or been a partner in at least two of them within the last five years.

The government, which hopes the reform will lure capital and reverse a 30 percent slide in crude output over the past decade, said companies can recover costs up to 60 percent of revenue when they make a commercial discovery.

The NHC said that it foresees drilling of at least 26 exploratory wells over the next 36 months per contract. (Additional reporting by Christine Murray and Gabriel Stargardter; Editing by Simon Gardner and Marguerita Choy)

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