Bloomberg News

Pemex to Include Offshore Gulf Fields in Contract Proposals

June 10, 2011

(Adds comments on Perdido project in 14th, 15th paragraphs.)

June 10 (Bloomberg) -- Petroleos Mexicanos, Latin America’s biggest oil producer, is preparing a pair of offshore contracts allowing companies such as Exxon Mobil Corp. and BP Plc to gain access to the Mexican side of the Gulf of Mexico.

Pemex, as the Mexico City-based company is known, plans to announce in August a second round of performance-based contracts that may include offshore fields for the first time, Carlos Morales, head of exploration and production, said yesterday in an interview in Puebla, Mexico.

“I estimate that in July or August we’ll be presenting the proposals to the board,” Morales said. The company board may approve “from four to seven fields. The offshore blocks that we’re proposing for this round are Arenque and Atun and are located in shallow waters.”

State-owned Pemex aims this year to offer three rounds of performance-based contracts to open developments to foreign and private producers for the first time since Mexico nationalized its oil industry in 1938. Pemex is seeking to hire companies to increase output after six years of annual declines.

In August, the company is expected to disclose winners of the first round of contracts for three mature onshore fields in Mexico’s southeastern state of Tabasco.

BP Plc, Europe’s second-largest oil producer, and Repsol YPF SA, Spain’s largest oil company, were among more than 20 companies that each paid about $30,000 per project to acquire bidding rules and access to the data room for the first round.

Project Delays

Pemex has been preparing the accords since Mexico revised its oil laws in 2008. First-round project delays created analysts’ concern whether the contracts would expand to bigger offshore projects and later to deep waters where Mexico estimates it may have 30 billion barrels of oil.

“Offering offshore projects is a very important step for Pemex, because it’s opening the doors for international oil companies that exclusively want offshore fields,” George Baker, a Houston-based energy consultant, said yesterday in a telephone interview from Houston.

Pemex may have started by offering onshore projects to attract more Mexican companies, Baker said.

A third round of contracts including the Chicontepec project should be offered by October, Morales said, while deepwater fields may be announced in next-year’s first quarter “at the latest.”

Deep-Water Experience

Pemex is accelerating its deep-water exploration activity. The company, which primarily discovered gas in 15 deep-water wells drilled since 2005, plans to five more deep-water wells this year and eight to 10 wells in 2012.

Morales, 56, said Pemex may approve as soon as next month its first foreign project to get more experience in the Gulf’s deep waters.

“The more advanced plans are in the U.S. waters of the Gulf of Mexico,” he said, adding that the company hasn’t ruled out projects in Colombia or Africa.

Pemex wants to get involved in a project near the Perdido region on the U.S. side, Jose Antonio Escalera, deputy director for technical exploration, said today in an interview.

Royal Dutch Shell Plc has said its Perdido project, the world’s deepest working oil field, is pumping at about a tenth of its capacity of “well over” 100,000 barrels a day following last year’s drilling moratorium in the Gulf.

Unlike onshore fields, Gulf deep-water projects may shield companies from concerns related to blockages by local activists or security risks from organized crime, Baker said.

--Editors: Robin Saponar, Dale Crofts

To contact the reporter on this story: Carlos Manuel Rodriguez in Mexico City at carlosmr@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net.


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