Mexico Energy Reform Round One Onshore Blocks Oil and Gas InvestmentsMexico’s oil sector regulator National Hydrocarbons Commission (CNH) approved this week the call for bids for its next package of contracts covering 26 onshore areas.  The onshore oil and gas areas to be tendered are spread across five states and contain 2.5 billion barrels of oil equivalent (boe) in proven, probable and possible reserves.  The oil and gas reserves in are located in five Mexican states: Nuevo León and Tamaulipas on the northern border, the Gulf Coast state of Veracruz, and the southeastern states of Chiapas and Tabasco.

Crude oil output from the areas could reach 35,000 barrels per day while natural gas production could total 225 million cubic feet per day, officials from CNH said. The call for bids for the onshore areas follows two earlier packages covering 19 low-cost shallow water areas divided into nearly two dozen contracts, all part of the so-called Round One tender that was launched late last year along with an initial allotment of areas to Pemex.

The Round One tender features packages of blocks grouped by type of petroleum basin and will allow oil companies to bid on contracts covering 169 offshore and onshore blocks.  The onshore areas range in size from about 3 square miles (7.7 sq km) to 23 square miles (60 sq km) and will be tendered as 26 individual license contracts.

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Recent modifications to the pre-qualification requirements for the 26 license contracts include less focus on companies’ operational or financial capacities, as they did in previously announced Round One tenders.  Engineering experience is and track record will play a more important role.  This is especially relevant for unconventional sites that require less capital investment to operate.

mexico onshore drilling energy reform bidding investments round oneWinning bids for onshore oil fields will be announced on December 15 while results from Round 1 and shallow waters will be announced July 15.

The onshore fields represent the third of five oil-block tenders that Mexico is planning this year under Round One, as the government dubbed the first bidding round in which private companies can explore for and produce oil and gas in Mexico.

The following phases of Round One will seek bids for deep-water and extra heavy crude projects, followed by unconventional deposits such as those found in shale rock.

Among Mexican companies that have been preparing to participate in the oil opening, Grupo Carso, the industrial and retail conglomerate of billionaire Carlos Slim, recently reorganized its energy assets into a single unit called Carso Energy. Conglomerate Alfa, which has an oil and gas unit and is seeking to buy Canadian-Colombian oil concern Pacific Rubiales Energy Corp., has said it plans to participate in the opening.

Sierra Oil & Gas is a company set up last year as a result of the oil sector opening. The controlling shareholder of mining and metals concerns Fresnillo PLC and Industrias Peñoles created Petrobal, which is headed by a former Pemex exploration and production chief.

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