Ryo Manabe
General Manager, Houston Office, America and Africa Division
INPEX Corp.
/
Insight

Doubling Down on Longterm Presence in Mexico

Fri, 11/24/2017 - 17:00

In the 15 years since Japan’s largest IOC, INPEX, made its first steps into Mexico’s Burgos basin, a lot has changed. But the company’s medium to long-term vision was validated in 2012 and the country now stands as one of its priority exploration areas, according to Ryo Manabe, General Manager of the company’s Houston office and America and Africa division. “We are very happy with the improved transparency, tax regime and commercial terms since the Energy Reform was signed,” says Manabe. “We are appreciative of the opportunity to invest in Mexico. Since we also have exploration and production activities on the US side of the Gulf of Mexico and expect to see some geological continuity, we are optimistic about our opportunities in Mexico.” 


In December 2016, INPEX formed a consortium with Chevron and PEMEX, which collectively won deepwater Block 3 in Round 1.4, which is located in the Perdido basin in the northern region of the Gulf of Mexico. In this joint venture, INPEX and PEMEX hold an equal stake of 33.3333 percent, while Chevron is the operator and holds a slightly larger stake of 33.3334 percent. In Mexico’s Burgos development, INPEX is partnered with Petrobras, which holds a 45 percent share as well as the operatorship of the contract, and Diavaz, which has a 15 percent share. The Japanese IOC maintains a 40 percent share of the project. 


Mexico’s importance is remarkable since INPEX’s exposure in North America is limited compared with its extensive presence in Indonesia, Australia and Abu Dhabi. In particular, INPEX has a significant presence in the seas of Western Australia, with 22 blocks around the Ichthys gas-condensate field. Manabe points to these developments in the eastern hemisphere as an important staging ground for the competitive advantages INPEX brings to the Mexican market. “First, we have gained operational experience in these areas,” he says. “Second, INPEX has a healthy balance sheet and cash reserves that permit us to invest in Mexico. Third, INPEX is not as large as other IOCs so we must collaborate with partners. Due to our presence in other areas, we have substantial experience in partnerships with other companies such as Shell, Total and Chevron, with which we have good relationships in Indonesia, Australia, Kazakhstan, Venezuela, Brazil, Congo and Angola, among others.” 


Entering Mexico in 2003 in a joint venture with Petrobras and Diavaz also yielded strong and long-standing links with Mexico’s NOC, Manabe says. “PEMEX is the most experienced oil company in Mexico. We have already had positive experiences with the company, not only in exploration but also in documented production after successful discoveries. We are happy to partner with PEMEX.”


In August 2017, INPEX and its partners submitted an exploration plan for deepwater Block 3, which was approved in March. In the first phase, the company will undertake seismic processing and seismic exploration with wide azimuth technologies to find the best drilling prospect. “INPEX would like to bring the best technology for seismic processing and interpretation,” says Manabe. “But Chevron and PEMEX also have extensive experience in the interpretation of seismic data from the Gulf of Mexico. All this experience has given us an important understanding of the real geology of Mexico.”


INPEX also expects to follow up on its onshore and deepwater footholds in Mexico by extending its activities into shallow waters. INPEX participated in Mexico’s Round 2.1 and 3.1 but was unsuccessful. However, INPEX made a successful joint bid in Mexico’s second deepwater bidding Round 2.4 to explore Block 22 AP-CS-G03 with Chevron and PEMEX. As Mexico is one of its priority exploration areas, the company will continue monitoring the bidding rounds in 2018 and after. 


The Energy Reform has also become increasingly important for the company’s medium to long-term vision. “INPEX has developed a global exploration strategy over the last few years and Mexico is one of the highest priority areas,” says Manabe. Globally, INPEX has very rarely assumed the role of operator of exploration blocks, preferring to leave this function to one of its partners. “We would like to operate in exploration and production but currently our strategy is to try to participate in other roles in the available blocks,” Manabe says.