Pemex gets all fields with probable reserves before Round Zero
MEXICO CITY (Bloomberg) -- Pemex, preparing for the end of its 76-year state oil monopoly, was granted rights to all the proved and probable oil reserves it sought for development as Mexico opens its doors to foreign competition.
Pemex will maintain 83% of the country’s so-called 2p reserves and 21% of potential reserves, Energy Minister Pedro Joaquin Coldwell said today in Mexico City. Mexico’s investment in fields will be $50 billion in 2015-2018, he said during a presentation of the non-competitive bidding known as round zero.
The opening of Mexico’s energy industry to private investment is considered to be on a scale with the North American Free Trade Agreement in terms of economic significance, Alberto Ramos, chief Latin America economist at Goldman Sachs, said in an Aug. 7 research note. The energy ministry will now prepare for the first round of open bidding on untapped Mexico fields, scheduled to be held in the first quarter 2015, according to Coldwell.
“We see this as a positive result, as Pemex gets to keep fields that it knows, but more of the important prospective resources remain available for the private sector to invest,” Carlos Capistran, the chief Mexico economist at Bank of America Corp., said in a note to clients. “Overall a positive small surprise with respect to our expectations.”
In March, Pemex asked to retain fields that hold Mexico’s 13.44 Bbbl of proven oil reserves and 83% of the 24.8 Bbbl 2P reserves.
Pemex will hold production rights to the Cantarell and Ku Maloob Zaap fields, as well as the Lakach deepwater gas field and areas of the Perdido deepwater field, where it has explored, Deputy Energy Minister Lourdes Melgar said at the same event.
The state company will seek two joint ventures in the Perdido area, as well as partnerships in Lakach and extra-heavy oil fields and mature fields, Chief Executive Officer Emilio Lozoya said today. Pemex’s joint ventures will require investments of $32.3 billion, Lozoya said
Mexico’s energy overhaul, enacted this week by President Enrique Pena Nieto, has been touted as the solution to falling oil output, which is headed toward a 10th straight year of decline. The reform breaks Pemex’s production monopoly and allows companies such as Exxon Mobil Corp. and Chevron Corp. to explore for oil in deep waters and onshore shale gas deposits.
Mexico’s production is forecast to increase to 3 MMbopd by 2018, up from 2.48 MMbopd through the first six months of the year, according to oil regulator CNH. Pemex’s output probably will remain at a minimum of 2.5 MMbopd for the next two decades with the fields it has been assigned, Melgar said.
The company cut its 2014 production forecast to the lowest level in at least 24 years, trimming estimates to 2.44 MMbopd from 2.5 MMbopd, Gustavo Hernandez, Pemex’s head of exploration and production, said on July 25.
Round One preliminary terms will be released between November and January with contracts to be awarded in May 2015, Juan Carlos Zepeda, president of CNH, said at the event.