ONshore Rounds MAPMon, 04/01/2019 - 17:40
All onshore fields offered by PEMEX and CNH through the three bidding rounds were provided through license contracts, which involve the least government participation of all the contracting models allowed by the Energy Reform, making them the closest thing to a traditional concession contract. This provided an attractive offer for companies willing to do the complicated work of establishing or increasing production in mature and unconventional fields that are extremely rich in reserves, both proven and prospective, but whose extraction involves the labor-intensive and capital-intensive application of more specialized technology due to their difficult geological conditions. Operators also need to account for the cumbersome geography of the jungle environments in the states of Chiapas, Tabasco, Veracruz and Tamaulipas, in addition to issues related to security, ecological regulations and community engagement. However, they do have the advantage of being situated close to Mexico’s legacy locations for the oil and gas industry, in many cases preceding the Mexican Revolution and the formation of PEMEX, so access to infrastructure and transportation facilities is simplified.
The fields were mostly awarded to newly formed independent Mexican operators like Jaguar E&P, along with larger established national players, such as Diavaz and Grupo Carso, that are getting involved in these rounds to launch their operational and asset management capabilities. On the other hand, the onshore farmouts were won by more established but still relatively independent international E&P companies with a degree of previous experience in Mexico, specifically German DEA Deutsche Erdoel AG and Egyptian Cheiron Holdings. The future success of these partnerships with PEMEX will determine whether this particular form of tendering will be expanded in the rounds to come as the AMLO administration follows through on its plans to reinvigorate PEMEX.