March 27, 2018 / 4:39 PM / 2 years ago

Mexico's Pemex to operate two shallow water projects with partners

MEXICO CITY (Reuters) - Mexican national oil company Pemex [PEMX.UL] plans to operate at least two new blocks it won with partners in a shallow water auction on Tuesday, the company’s exploration chief said in an interview.

Mexico's Energy Minister Pedro Joaquin Coldwell speaks during a news conference after attending an auction of shallow-water oil and gas blocks, in Mexico City, Mexico March 27, 2018. REUTERS/Henry Romero

Pemex expects to invests as much as $300 million overall in a four-year exploration phase for the seven contracts it won, more than any other company, said longtime head of exploration, Jose Antonio Escalera.

Petroleos Mexicanos, as the state-owned company is formally known, grabbed seven of the 35 blocks on offer, either as an individual bidder or in consortia.

Overall, 16 blocks were awarded in the last tender scheduled before a July presidential election and the energy ministry forecasts investment of as much as $8.6 billion over the lifetime of the contracts.

“We can say that of these six blocks that we won (in consortia) in two of them we will be the operator and in the other four our partners will be the operators,” said Escalera.

Pemex will operate Block 18, won with Spain’s Cepsa, as well as either Block 32 or 33, won with France’s Total, the executive said.

Total said in a statement that it will hold a 50 percent stake in block 32, while Pemex, the operator of the block, will hold the other half. The French oil and gas major will be the operator in block 33 where both companies hold equal shares.

In block 34, it said BP will be the operator with a 45.5 percent stake. Total will hold 42.5 percent and PanAmerican 15 percent.

In recent years, Pemex has sought more equity partnerships in projects to find and extract new streams of oil and gas as a way for the cash-strapped firm to reverse declining output.

“One thing that makes us very happy is that today we have two new partners,” Escalera said, referring to Cepsa and Total.

Pemex has in the past few years entered into partnerships with Australia’s BHP Billiton, U.S. major Chevron, Anglo-Dutch major Royal Dutch Shell, Japan’s Inpex and Germany’s DEA Deutsche Erdoel.

Escalera said that in Block 29 that Pemex won as an individual bidder, the company plans further study of the area and to begin drilling a first exploration well by the end of 2019 or the start of 2020.

“In the others, we’ve only committed to further study” in the projects’ initial phase, he said.

Escalera said the blocks it won in the Tampico-Misantla basin on Tuesday will permit a cost-saving cluster adjacent to another block it won last year with DEA Deutsche Erdoel.

“This will allow synergies...and in these areas Petroleos Mexicanos already has oil infrastructure in place,” he said.

More than 70 percent of Pemex’s current oil and gas production comes from nearby shallow water projects.

Reporting by David Alire Garcia and Marianna Parraga; Additional reporting by Bate Felix in Paris; Editing by Dave Graham, Aaron Sheldrick and Adrian Croft

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