Successful bid rounds in Mexico and Brazil during Q1 secured $3.1 billion in cash – a huge step forward for both countries in securing global interest in offshore development.
Brazil 15th bid round in March was responsible for 79% of this value, with huge individual bids from ExxonMobil, Petrobras and Norway’s Statoil. Mexico’s deepwater Round 2.4 (January) and shallow water Round 3.1 (March) drew $649 million in cash bids combined.
A new report released by Evaluate Energy, Sproule and the Daily Oil Bulletin shows that while Brazil’s round drew larger cash bids, significant changes within Mexico’s oil and gas market are having a profound impact:
- The $525 million generated in Round 2.4 was a huge step forward from Mexico’s seven previous rounds, where only a handful of blocks drew any kind of cash bid.
- Both rounds drew keen interest from huge oil and gas companies that can invest anywhere in the world but chose Mexico’s high potential deepwater assets. The biggest winner among the companies involved in Round 2.4 was Royal Dutch Shell, a company with vast deepwater Gulf of Mexico experience and recent discoveries. Petronas, Total and Repsol were among the other key winners; and
- All eight blocks on offer in the Southeast basin drew multiple bids in Round 3.1. Block 30, eventually won by Germany’s DEA Deutsche Erdoel AG, the U.K.’s Premier Oil and Malaysia’s Sapura E&P, was the most competitive and received seven separate bids.
Source: “Mexico – How evolving energy reforms are driving foreign investment”
The main goals of Mexico’s energy reforms, which were instigated in 2013 and are detailed within the report, have been to inject competition into the upstream sector. It cannot be denied that this has been achieved so far.
The changes are also reshaping how Pemex, which has previously monopolised activity, operates within this altered marketplace. For sure, the company is still winning blocks ¬– four new blocks in Round 2.4, and seven new blocks in Round 3.1. But of the 11 blocks won by Pemex, nine were as part of a consortium and six were won by defeating a rival bid.
Full results and analysis of the key awards in all three rounds is available in the report, which can be downloaded here.