Mexico auctions two-thirds of blocks in shallow water oil tender

Juan Carlos Zepeda, head of the oil regulator known as CNH which oversees the auction, also saw the number of equity tie-ups among oil companies as a positive sign, expressing optimism that "a bit more than the global benchmark of 30 percent" could be assigned.

Energy portal Upstream Online yesterday reported that Mexico awarded 10 of 15 shallow-water areas on offer during its second bid round for shallow water acreage, with both global giants and local players participating and Pemex inking two more partnerships. Wood Mackenzie had anticipated most activity to centre around areas 6-11 with some bids for areas 12-14 and also accurately predicted that two-thirds of the 15 blocks offered would be awarded.

Among the companies that prequalified to compete are Chevron Corp, ConocoPhillips, Eni SpA, Repsol SA, Royal Dutch Shell Plc, Total SA and China National Offshore Oil Corporation (CNOOC Ltd).

The auction was the most recent step in Mexico's bid to attract more private investment to the industry after Congress changed the constitution in late 2013 to end the 75-year production and exploration monopoly of state oil company Pemex. The Colombian company also won a block with PC Carigali, a unit of Malaysian oil firm Petronas.

Top government officials told Reuters before the auction they were hopeful Mexico would assign at least one-third to 40 percent of the blocks in the shallow water round.

Mexico held its first-ever bid offering for shallow waters, Round 1.1, almost two years ago in July 2015. The previous ones yielded 39 contracts with forecast investment over their lifespan of $48.8 billion, according to the government.

Mexico hopes by opening up the energy sector it will help reverse years of declining crude oil output. Total crude production in Mexico has fallen to 2.01 million barrels per day from a peak of 3.38 million in 2004.

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