Jan 31st is the date set by Mexico’s oil regulator and the national hydrocarbons commissions as the date
for next round of auctions for the deep water oil drilling. The 2.4 auctions will offer 30 areas. 10 of which
are in Cordilleras Mexican’s deep-water basins, the other ten are in the Salina Basin, one is in the
Yucatan Platform, and the remaining nine are in the Perdido Fold Belt, off the US.

Oil investment companies view the Cordilleras Mexicans as having vast and untapped potential.
This auction will be the first of its kind to be made available to the international market

 

Rights for exploration

On 5th December, the Mexican government awarded the rights for the exploration of the eight deep-
water blocks in the Gulf of Mexico to different international oil investment companies. The government
also auctioned a majority stake in a deep-water oil field. The oil fields will be developed in partnership
with Pemex, Mexico’s state owned oil firm. This combination has been widely lauded as a success.

 

Tender for private investors

The December tender was the fourth tender open for private oil investment companies to bid on oil
and gas acreage in Mexico since the year 2013. The deep-water blocks that were offered had enormous
resource potential and proximity to producing fields over the maritime border in the Gulf of Mexico and
were, therefore, considered as the prized assets.

Some of the largest names in the international oil still committed to investing in Mexico despite the
nearly two and half year slump in oil prices which has slashed capital budgets for companies across the
industry. This, therefore, represents the first wave of the large scale foreign investment in the oil sector
in Mexico. Many winning bids surpassed auction’s minimum requirements, and this indicated the
premiums that firms were willing to pay to develop resources in Mexico.

There was a total of up to 10 explorations that were up for grabs. Four blocks were in Perdido fold belt
area which is located immediately south of the maritime line while six in the more prospective Salina
Basin in the Southern Gulf of Mexico.

 

How this will benefit Mexico

As Mexico sets a date for when to begin drilling for deep-water oil, the assigned contracts have an
associated investment of 34.4 billion dollars approximately. This can have a wider ripple effect in
Mexico’s oil sector. This means that on average, the Mexican state will receive between 60% and 66% of
the profits that will be generated from the contracts. The ten blocks offered contain almost 11 billion
barrels of oil. This will provide a real boost to the sagging oil output in Mexico.

There are no immediate jolts expected shortly because the first oil from the Trion field is not expected
until 2023. The awarded blocks will, therefore, take up to 10 years to develop.

The drilling of oil is expected to boost the industry and help in serving the drastically increasing demands
in oil.