UK oil majors eyeing enhanced partnerships in Mexico, says Pemex official

A senior official from Pemex, the country’s dominant national oil company (NOC), told Sharecast that British interest, which also extended to BHP Billiton, has been among the strongest of international participants as the NOC seeks partners and Mexico opens up the sector to private companies for the first time in recent memory.

On 11 May, Mexico’s National Hydrocarbons Commission approved the auction for land-based exploration areas in five states in southern and northern Mexico, which together could yield 225 mcf of gas per day along with 35k barrels of oil per day.

The move constitutes the third of five sets of areas Mexico plans to auction in Phase-1. The previous two auctions were for offshore licences in shallow water areas with the aforementioned London-listed companies in the running.

Speaking to Sharecast on the sidelines of the Baker & McKenzie Oil & Gas Institute in Houston, USA, Valeria Vázquez Maulen, general counsel for exploration and production at Pemex, said: “The international response has been very impressive with major names [including all three British oil and gas blue chips] in the hunt for blocks made available.”

She added that the experience would be a positive one for Pemex and international investors. Allowing the private sector to compete with Pemex required altering a 76-year law as well as Mexico’s constitution.

“Pemex is quite excited about the shake-up, sharing its knowledge base in Mexican oilfields and partnering with oil majors. With more, including shale exploration blocks, to follow – what will unfold over the coming years is quite exciting, perhaps even more so than what we have seen so far.

“Phase-1 [bidding for which concluded on 31 March] was seen as a test case by several overseas bidders, from UK majors to US independents and a host of European companies. But we’ll have to wait a couple of months to see how our alliances unfold,” Vázquez Maulen said.

Bilateral relations between London and Mexico City remain on a solid footing. In March, barely weeks before the closure of the initial round of bids, Mexico’s President Enrique Peña Nieto met UK Prime Minister David Cameron in London, along with a high level trade delegation to entice British investors and reassure them of legislative progress.

Vázquez Maulen said such overtures help as the process moves beyond nascent stages. “For Phase-3 bids, especially deepwater blocks, we are going to be working very closely with British companies, many of whom we have know very well as an operator in the Gulf of Mexico.

“For Pemex, being a historically dominant player since nationalisation [in 1938], what’s afoot is a big change which we have to embrace as an opportunity. That opportunity is also not lost on British investors,” Vazquez-Maulen concluded.

Mexico is hoping to attract up to $50bn in investment towards its oil and gas sector, under reforms unveiled by the Peña Nieto administration.