Exxon, Chevron Clear to Bid on Mexican Shallow-Water Blocks

Mexico approved 19 companies and seven groups to bid on 14 shallow-water exploration blocks as the country prepares to allow private producers to drill in its waters for the first time since 1938.

Exxon Mobil Corp., Chevron Corp., and Pacific Rubiales Energy Corp., were among the companies that Mexico’s oil regulator, known as CNH, cleared to develop an estimated 80,000 daily crude barrels in the Gulf of Mexico, Commissioner Juan Carlos Zepeda said in a live feed of the meeting. Some 34 companies applied to pre-qualify for the July 15 auction.

Mexico forecasts that the opening of the energy industry will bring in $62.5 billion in private investment by 2018 and increase its annual oil output by 500,000 barrels a day in that time.

Shell and Petrobras began the process of pre-qualification but ultimately decided to stop and won’t participate as bidders in this first phase of the first round, Zepeda said. As part of the pre-qualification process, interested companies paid for access to data rooms with seismic information on the blocks and were required to meet qualifications regarding investment capacity and experience.

The fall in oil prices, which declined to five-year lows in recent months, prompted the Finance Ministry to offer more incentives to companies. In March, the pretax profit margin minimum was increased to 20 percent from 15 percent before triggering a mechanism to share more of the output with the government. The final version of the contract details for the 14 oil blocks will be published June 9, Zepeda said.

In addition to these 14 shallow-water blocks, the CNH will also auction 9 other shallow-water blocks in the Gulf of Mexico in September and 26 onshore blocks in December.

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