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Mexico's second deepwater bid round failed to disappoint as 19 of 29 blocks were awarded, including nine to Anglo-Dutch supermajor and Mexican offshore newcomer Shell. Eleven international firms from 10 countries bidding individually and in consortia won blocks--thought to be mostly oil-rich--in the Perdido Fold Belt, Cordilleras Mexicanas basin, and Salina basin of the Gulf of Mexico. Nineteen firms from 15 countries placed 39 bids overall. The winning bids comprised 44,178 sq km, 23 well commitments, and $525 million in tiebreak payments. Mexico's National Hydrocarbons Commission (CNH) announced the results 31 January in Mexico City.
Later this month, Mexico will auction off 35 shallow-water blocks in the Gulf of Mexico, as its attempt to revive its oil and gas industry moves forward. It will be the ninth auction held under a reform program that began 4 years ago, and will follow the most successful auction to date. The 31 January deepwater auction surpassed expectations, drawing participation from supermajors and national oil companies (see page 42). Along with Argentina, Mexico has emerged as one of the upstream bright spots in Latin America. At the January auction, Mexican regulatory officials expected only 7–10 blocks to be awarded.
Can Mexico be the catalyst that will lead a deepwater renaissance for the oil and gas industry? Six panelists at a 4 May session at the Offshore Technology Conference in Houston gave a very positive, hopeful view of the potential for deepwater growth there and--as a best case--a renaissance. The panelists are all directly involved with the expanding international opportunities in the Mexican upstream sector. "There is a big opportunity sign pointing toward Mexico; Mexico is open for business," said Helge Haldorsen, director general of Statoil Mexico and former 2015 SPE president. He described Mexico's 2013 energy reform as "a tremendous initiative and a bold vision" and said the country's four bid rounds for license acreage "have all been transparent" with more rounds to come.
The opening of Mexico's oil and gas sector was a landmark moment in the industry, but despite the potential upside, the uncertainty and risk surrounding unfamiliar offshore territory in a volatile price market kept many potential investors at bay. Today, more than a year after the first auction of -shallow-water blocks, operators have a better idea of what to expect from Mexican authorities, but there are still questions left to be answered with more public bids on the horizon, an expert said. In a presentation held by the SPE Gulf Coast Section's International Study Group, Loren Long discussed Talos Energy's decision to bid on Mexican shallow-water leases, its -experiences operating in the country, and his outlook on upcoming auctions. Long is the managing director for Talos' Mexican operations. Talos, in a consortium with Mexican company Sierra Oil and Gas and British company Premier Oil, won two contracts during the first phase of the initial round of auctions, held on 15 July 2015.
In August, Mexico's National Hydrocarbons Commission delayed the date of its next deepwater auction by a month to January 2018 to give companies more time to study the acreage on offer. Although postponing bid rounds is usually taken as a sign of lack of interest by private firms, the opposite is true in Mexico. Discoveries announced over the past few months have validated Mexico's historic energy reform effort and may propel the oil industry there to reverse years of decline. In a sector hampered by the downturn in oil prices, Mexico's offshore has emerged as a bright spot. In July, US independent Talos Energy, Sierra Oil and Gas of Mexico, and Premier Oil of the UK announced one of the largest shallow-water finds of the past 20 years.