Bloomberg News

Pemex in Talks With Saipem, Petrofac for Arenque Field

July 23, 2012

(Corrects name of Petrofac in headline.)

Petroleos Mexicanos, the world’s fourth-largest oil producer, is in talks with Petrofac Ltd. (PFC), Saipem SpA (SPM) and other domestic contractors to offer rights to develop its Arenque field after an auction failed last month.

Pemex, as the company is known, expects to grant the contract for the offshore field “in the next few weeks,” Chief Executive Officer Juan Jose Suarez Coppel said in a July 20 interview.

Mexico, which has given Pemex a monopoly to produce and refine oil since expropriating assets from U.K and U.S. oil companies in 1938, is seeking contractors to develop mature fields and increase well-extraction rates. The three bids received for Arenque in a June 19 auction were higher than the $7.25 a barrel that Pemex was offering to pay as a maximum rate.

Arenque was the largest field offered in Pemex’s second round of bidding for integrated service contracts. The Mexico City-based company produces about 6,000 barrels a day from Arenque.

Schlumberger Ltd. (SLB:US), the world’s largest oil-field services provider, Petrofac and Alfa SAB (ALFAA) were among the bidders that won contracts to develop four other mature oil fields.

The auctions last month were the second round of bidding since changes to national oil laws allowed other producers to gain control, without ownership, of Mexican fields for the first time since the 1938 nationalization.

Suarez Coppel, 53, said Pemex is moving forward with plans for a third round of contracts for its Chicontepec development, a field with small pockets of oil and low pressure spread across the states of Puebla, Hidalgo and Veracruz near the Gulf of Mexico.

Chicontepec Auction

“Unless somebody tells me to stop,” the next auction will be offered this year for Chicontepec under the current accord framework, Suarez Coppel said when asked if the possibility of an overhaul of energy laws may undermine the current contract model, where Pemex pays an operator a fee per barrel produced.

Incoming President Enrique Pena Nieto has declared that overhauling Pemex will be a priority when he takes office on Dec. 1.

Pemex plans to boost Chicontepec’s production by almost sixfold from 70,000 barrels a day to 400,000 by 2018.

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: James Attwood at jattwood3@bloomberg.net


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