Pemex plans to bid on deepwater in initial auction

HOUSTON – The CEO of Mexico’s national oil company says Petroleos Mexicanos will keep a hand in deep-water and complex onshore plays as new energy policy breaks its monopoly hold on oil and gas drilling in the country.

Petroleos Mexicanos, or Pemex, plans to request the right to push forward on everything from the ultradeep-water projects to shale plays when it begins negotiations with the Mexican government on which reservoirs will be opened to foreign investors.

Mexico passed the landmark energy reform legislation in December to bring international investment that will help boost oil and gas production. Mexico’s production fell from 3.3 million barrels per day in 2005 to little more than 2.5 million barrels per day last year.

“We will be in some fields but not in all,” Pemex CEO Emilio Lozoya Austin said in an interview with FuelFix, explaining that the company will focus on the highest-value projects, including shallow-water, deep-water and onshore high-pressure reservoirs.

“Pemex will be present everywhere,” he said. “We will always go for the projects that offer more value for our investments.”

The Ministry of Energy has said it could begin auctioning new fields as early as mid-June next year. First, it will identify which fields will be left to Pemex, based on proposals made by the Mexican company — a process known as Round Zero. The constitutional amendments gave the company 90 days — ending March 21 – to select those sites.

Outside experts have speculated that  Pemex will form joint ventures with international companies to access capital needed to develop its pricier projects, such as deep-water plays, where Pemex has relatively little experience.

Lozoya said that Pemex plans to partner with international companies, but will not be able to form these agreements in time for the deadline, because the necessary legislation is still being drafted by Mexican legislators. These energy reform laws will lay out the conditions of operating in Mexico, including national content rules that specify the amount of Mexican labor and services that must be dedicated to each project.

That legislation will not be ready before mid-April, according to the schedule released by the constitutional amendments.

“As soon as the secondary legislation is passed in April, we will move fast to negotiate terms, hoping to have projects on the way and partners by the beginning of next year at the latest,” Lozoya said.

But while Pemex plans to increase its deals with private companies, Lozoya said that any deal-making will be reviewed by the Ministry of Energy, or SENER, to ensure that all contracts are competitive.

“SENER will have a say to make sure that all negotiations are done under the most strict rules of transparency and with the best economic terms for the state,” Lozoya said.