Advertisement

Aussie companies early victors in Mexican oil auction

Bids for shallow-water acreage may be bellwether for regional overhaul.

By Daniel J. Graeber
Aussie companies early victors in Mexican oil auction
Success of auction for permits for offshore Mexico may test oil sector reforms announced last year by Mexican President Enrique Peña Nieto. File Photo by Dennis Brack/Pool/UPI | License Photo

MEXICO CITY, July 14 (UPI) -- Australian media reports Tuesday energy companies there are among the early victors in the first round of auctions for exploration permits offshore Mexico.

Australia's BHP Billiton and Woodside Petroleum each prequalified as bidders for the first round of auctions for permits to explore the shallow Mexican territorial waters of the Gulf of Mexico, the first in more than 70 years.

Advertisement

Neither company offered a statement on the approval. Deutsche Bank energy analyst Paul Young told The Sydney Morning Herald deepwater permits, expected on the auction block next year, were among the "most promising and anticipated acreage" offers in the region.

Mexican President Enrique Peña Nieto last year set a goal of producing 3.5 million barrels of oil per day by 2025, which would be a 40 percent increase from 2013 levels. The president has opened up Mexico to private investors after more than 70 years under a monopoly controlled by state-run Petroleos Mexicanos, or Pemex.

RELATED AAA: California skewing national gas price average

The government is auctioning off rights to 14 tracts covering an estimated 2,600 square miles with reserve estimates of around 686 million barrels of oil equivalent, with most of that existing as light crude oil.

Advertisement

Analysis of the Mexican auction from consultant group Wood Mackenzie finds that who comes to the auction is as important of a metric as is the potential prize.

"A healthy mix of companies of different sizes and expertise levels will help Mexico create a domestic, private oil and gas sector, in addition to welcoming international players," the group said in an emailed statement.

RELATED Europe offers grants for energy security

Before the Mexican president's reforms, the U.S. Energy Information Administration said it expected production from Mexico to decline from 3 million barrels per day in 2010 to 1.8 million bpd by 2025. With the reforms, Mexican production holds steady at around 2.9 million bpd through 2020.

RELATED Plains taking extra caution with St. Louis oil spill

Latest Headlines

Advertisement
Advertisement

Follow Us

Advertisement