MEXICO CITY (Reuters) - U.S. oil major Chevron Corp will focus on studying the geology of its block in Mexico’s deepwater Gulf during the first four-year phase of its contract, rather than drilling new wells, a senior executive said on Thursday.
The company, which leads a consortium that includes Mexican state oil firm Pemex and Japan’s Inpex, won the rights to deepwater Block 3 at auction late last year.
The exploration plan calls for the consortium to invest $37 million over four years, according to the National Hydrocarbons Commission (CNH), which expects to approve the plan in January.
The auction for rights was part of a sweeping 2013-14 energy reform that ended Pemex’s decades-long monopoly, as the government sought to reverse a decade of declining oil and gas production.
“Block 3 is very complicated and we want to use these first few years to better understand the geology,” said Evelyn Vilchez, Chevron’s top executive for exploration and production projects in Mexico, at a briefing with reporters in Mexico City.
The block is located in the productive Perdido Fold Belt which straddles the U.S.-Mexico maritime border.
Commercial production will likely take between 10 to 16 years to begin, with the time frame depending on successful exploration efforts plus other factors, she added.
Chevron has previously said it is also entering into Mexico’s newly opened retail fuel market, with plans to open 350 gas stations over the next three years.
The firm currently has six gas stations in three northwestern Mexican states with plans to open more shortly, said Jose Parra, Chevron’s downstream executive for Mexico.
It will initially supply them with Pemex gasoline, until other transportation and storage infrastructure projects can be brought online in the next few years, Parra said.
Earlier this week, Mexico’s finance ministry moved ahead by one month a long-awaited liberalization of fuel prices, previously scheduled for Dec. 30.
The government also published a tax and subsidy scheme designed to allow it to reduce the impact of abrupt price variations, seen by analysts as a way for it to avoid price spikes ahead of elections next year.
For many years prior to the passage of the energy reform, fuel and electricity prices were set by the government.
Reporting by David Alire Garcia, Editing by Rosalba O'Brien and Diane Craft