Shallow-Water Oil Auctions Fall Flat for Mexico

More bad news for Mexico’s state-run Pemex as the live auction for its shallow-water Ayin-Batsil oil play in the Gulf of Mexico failed to attract any offers for partnership.

This morning, Mexico’s Hydrocarbon Commission (CNH) officially declared the Ayin-Batsil abandoned.

Mexico is still hoping to find partners for onshore fields in the coming days. The live auction also offered up the Cardenas-Mora and Ogarrio oilfields, but results have not yet been published.

Ayin-Batsil is believed to contain 359 million barrels of oil equivalent in proven, probable and possible reserves. Between 1988 and 2015, 10 wells have been drilled in the shallow-water block, including eight wildcat wells and two appraisal wells.

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Pemex was looking for a 50:50 partnership for Ayin-Batsil, with the partner taking operatorship. A total of 10 companies had prequalified earlier in September to participate in the three-field auction. Those pre-qualified included Egypt’s Cheiron Holdings Ltd., China National Offshore Oil Corp. (CNOOC), Germany’s DEA Deutsche Erdoel AG, Ecopetrol SA of Colombia, Canada-based explorer Gran Tierra and Ogarrio E&P of Chile.

Three years ago, Mexico opened its energy sector to private investments in a landmark energy reform that ended more than seven decades of monopoly by state-run Pemex. 

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Mexico’s offshore auctions have garnered a fair amount of attention after an initial slow start.

Supermajors Exxon, Chevron, and BP are opening or planning to open their first service stations to tap into the Mexican refined products market. Shell is the latest Big Oil player to have entered Mexico’s retail market, pledging US$1 billion in investment over the next 10 years.

By Damir Kaletovic for Oilprice.com

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