State owned PeMex likely to sign first exploration and output agreements with international players

29-Jan-14

Petroleos Mexicanos, Mexico’s state-owned oil producer, expects to sign its first exploration and output agreements with international companies by end of 2014, after Mexico abolished its 75 year monopoly, as per Bloomberg. This will allow foreign companies to produce crude in the largest supplier to the U.S. after Canada and Saudi Arabia. The overhaul may bring an additional US$20 bln in foreign direct investment as soon as 2015, according to Bank of America Corp. Associations in refining, transportation and petrochemicals can be done once congress approves so-called secondary legislation, which is expected in April. Pemex will initially focus on mature and deep-water fields to establish the ventures, Chief Executive Officer Emilio Lozoya said. Pemex is exploring deep waters in the Gulf of Mexico in a bid to replicate U.S. success by companies including Chevron Corp. (CVX), Royal Dutch Shell Plc (RDSA) and Anadarko Petroleum Corp. (APC). The Mexican company is also seeking partners to help it maximize reserves in older fields. Schlumberger Ltd. (SLB), Petrofac Ltd. (PFC), and Alfa SAB (ALFAA) were among the winners to develop four mature oil fields in a 2012 auction. Foreign crude producers have to wait about two years before they will be allowed to bid on their own fields for exploration and production without Pemex, as per Deputy Energy Minister Enrique Ochoa. Prior to granting operating licenses, the legal framework has to be determined and Pemex must select the fields it plans to continue to develop.