A Strategic Cooperation Between PEMEX and Private Companies

Minister of Energy, Rocío Nahle said PEMEX will decide if the company accepts farmouts agreements during a Senate hearing early this week. She mentioned that if PEMEX needs the investment and those associates have a good business plan, the government will not object.

Farmouts are public-private partnerships that will allow PEMEX to share technological, geological, and economical risks with a private enterprise to increase and stabilize its oil production.

López Obrador’s government placed a halt on more than 100 contracts that were granted for exploration and production. This happened because companies did not achieve the goals they promised with 2014 Energy Reform, reported El Sol de México.

According to El Financiero, during Peña Nieto’s presidency, PEMEX hoped  to achieve 60 farmouts contracts in production activities. In 2013, it was planned that 22 enterprises would start working with the NOC, nevertheless, a lack of planning led to only 3 contracts being signed.

From 2015 to 2018 the National Hydrocarbons Commission only agreed to 3 contracts for the explorations and extraction of hydrocarbons. These partnerships were with the Australian BHP Billiton company, the Egyptian Cheiron Holdings and the German Dea Deustche Erdoe.

These contracts have only accomplished 46 percent of the MX$8,629 billion (US$410 billion) investment that was promised. Meanwhile, these contracts aimed to produce 56, 000 daily oil barrels, but nowadays there is a production of 99,000 barrels per day and 70 percent come from Ek- Balam, a field where PEMEX exclusively operates, reported Nahle.

During the Senate’s session, Nahle emphasized that private companies have not fulfilled their commitments and it has been more expensive and laborious for PEMEX.

During the Deepwater panel at Mexico Oil & Gas Summit 2020, expert panelists commented that different projects have been criticized by the Mexican government, however, these projects are extremely expensive and require years of planning and work.

E&C Offshore Mexico Country Manager at Saipem, Raúl González said PEMEX has been participating in deepwater projects and that after the Energy Reform only the Australian IOC BHP is still operating. In addition, he mentioned that these projects are new for PEMEX and that the company will require new technologies and investment that could be obtained forming strategic partnerships.

According to El Sol de México, Nahle said that the result of previous farmouts discouraged their continuation during the López Obrador administration and that the government’s priority is to rescue  national companies like PEMEX. Nevertheless, the government said on Monday that the NOC will be open for strategic associations if there is a better planning and more commitment from private companies.