Oil majors shun Mexico offshore auction as blocks go unsold

The largest oil companies have chosen to skip bidding for blocks in Mexico, as that nation tries to entice foreign investment 77 years after seizing energy assets.

Exxon Mobil Corp., Chevron Corp. and Total SA all passed on the first 14 shallow-water oil blocks auctioned by Mexico today in the country’s first-ever sale of territory in the Gulf of Mexico. Only one of Mexico’s first five oil blocks auctioned received a qualifying bid.

Nine bidders are expected to make offers. A consortium of Sierra Oil & Gas, Talos Energy and Premier Oil Plc won block No. 2 after the first block didn’t receive a bid, Mexico’s National Hydrocarbons Commission and Energy Ministry announced today.

Today’s auctions are the first opportunity for private companies to explore for oil and gas in Mexico since the nationalization of the country’s crude industry on March 18, 1938.

Nine out of the 14 oil blocks have probabilities of commercial success ranging from 20 percent to 36 percent , and their prospective resources ranges between 164 million and 384 million barrels of oil equivalent, according to data from the National Hydrocarbons Commission. Two other blocks have higher success probabilities, 42 and 54 percent, while the lowest has only 6 percent.