Two years of oil auctions in Mexico have now set the stage for an exploration drilling boom that should bring billions of dollars of investment and, eventually, lift sagging output.
Who’s the biggest winner? Definitely Eni. The Italian major has taken the most aggressive approach of all international companies since Mexico started auctioning acreage to foreign companies in 2015. Although, they did missed out on a fourth licence at Block 9, the most contested area. Cairn Energy submitted an equal bid and they won it in a tiebreaker by offering a larger bonus payment to the goverment. Also PEMEX, Ecopetrol, DEA Group, Petronas, Sierra E&P, Total, Shell and Lukoil adquired licenses too.
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In total, these companies have committed to invest at least 309$m and drill nine exploration wells. The Mexican goverment obviously has much higher hopes. If these explorations are sucessful, the energy ministry said, investment from the round could ultimately top $8bn and add nearly 200,000 barrels a day to the nation’s output.
The only downside to the round was lusterless interest in Mexico’s gas-rich prospects. I am quite sure that the reason behind this is the flood of cheap natural gas being piped into the country from the US, making it discouraging to invest in Mexico’s own gas resources.
Fabián Narváez Tovar is the CEO of Administradores Navieros del Golfo, Mexican branch of V.Group
