Law360, New York (May 27, 2016, 7:02 PM ET) — The landmark legislative reforms that opened up Mexico’s energy sector after 75 years of state control have largely been implemented, with the Mexican government holding auctions for onshore and offshore oil and gas exploration, as well as new electricity projects. Energy companies and investors are flocking to the country, hoping to grab a piece of the emerging energy pie, but attorneys say they must be mindful that they’re still venturing into uncharted territory. That means adjusting to increased government involvement in potential operations compared to other countries, as well as a more complicated and expensive process to secure land or rights-of-way for projects.“In many regulatory reform processes, there will always be a learning curve,” said Benjamin Torres-Barron, who leads Baker & McKenzie’s energy, mining and infrastructure practice group in Mexico. “The learning curve doesn’t just affect investors — it affects the regulators. There’s a huge amount of legal content that has been released and designed.”Here, attorneys offer five pieces of advice for energy companies looking to do business in Mexico as reforms continue to be implemented.
Source: 5 Tips For Energy Cos. Looking To Tap Into Mexico – Law360
Geotechnical firm Fugro has announced plans to carry out the largest ever survey for subsea hydrocarbon seeps, to cover an area of 180,000 square nm in the Gulf of Mexico. Naturally occuring seeps of hydrocarbons are an indicator of potential oil prospects, and Fugro says that finding them is a technically sophisticated process, requiring careful analysis of sonar backscatter data – but also a cost-effective way to hunt for oil reserves over a large area.The project will use multibeam sonar and sub-bottom profiling systems on three vessels, and data will be analyzed by geoscientists on board in real time. The survey will be carried out for multi-client geoscience data provider TGS, and is part of a larger industry-funded project called the Gigante Survey, which will also include 50,000 square nm of 2D seismic.
Source: Largest Ever Seep Survey for Mexico Offshore Auction
Foreign Affairs LIVE: Mexico’s Energy Future is a full-day, multi-faceted examination of Mexico’s overhaul of its energy policy featuring high-ranking viewpoints on investment, ecological impact, and the energy legacy of the Peña Nieto administration. Panel discussions will explore the first steps toward the implementation of the reform, and evaluate the outcome of Round Zero and Round One as well as prospects for Round Two. Opportunities and challenges will be highlighted in the fields of oil & gas exploration, refining, and logistics, with special attention to deep water and shale. The forum will explore the future of the power sector and the potential for renewables, project finance instruments and the role of PPPs.
Source: Foreign Affairs Live: Mexico’s Energy Future | Foreign Affairs
Mexico wants to maintain its momentum after many great changes – and some disappointments – seen in 2015. Here’s what needs to happen for 2016 to be a successful year in its upstream sector:
Source: Energy: Four Things On Mexico’s To Do List This Year – Forbes
Mexico plans to launch in September a new low-tax investment vehicle aimed at tapping markets to fund energy infrastructure in Latin America’s second biggest economy, four people familiar with the matter told Reuters.The new vehicle comes at a time of oil market oversupply that has depressed prices and reduced oil companies’ capacity to invest, but Mexico’s newly opened power market could still prove an attractive near-term destination.The sources said finance authorities are putting the finishing touches on rules for the vehicles, which will be similar to American “Master Limited Partnerships” (MLP) and modeled on Mexico’s successful real estate investment trusts (REIT) which are locally called FIBRAS.
Source: Mexico to unveil energy investment vehicle in September -sources | Reuters
Amid much pageantry and suspense, a Houston-based company is a member of a consortium that was the only group to win shallow water exploration rights offered by Mexico under the nation’s historic energy reforms.
Mexico’s Secretaría de Energía held a press conference and live video stream for the July 14 event.
As part of Round 1 of Mexico’s historic energy reforms, there were 14 oil and natural gas exploration sites up for grabs in the shallow waters of the Bay of Campeche.
The hours-long event ended with a consortium led by Mexico’s Sierra Oil & Gas with Houston-based Talos Energy and London-based Primier Oil as the only group that won bids.
The consortium won bids for two out of the 14 available sites:
The 14 exploration projects generated great interest when they were first announced in December.
A total of 49 companies expressed interest in the projects but the number was whittled down to five companies and four consortiums who qualified as actually submitted bids. Major companies such as BHP Biliton, Chevron and ExxonMobil qualified as bidders but did not submit any proposals.
Seven of the shallow sites did not receive a single proposal while five of the bids came in below what the Mexican government would accept.
Sierra Oil & Gas is Mexico’s is Mexico’s first independent oil and natural gas company.
Talos Energy, which is headquartered in downtown Houston, is an independent oil and natural gas company focused on offshore exploration and production.
via Mexico awards Sierra Oil & Gas, Talos Energy, Premier Oil oil exploration contracts in Round 1 – Houston Business Journal.
Mexican President Enrique Pena Nieto’s credibility on law and order was damaged this weekend by the prison escape of the nation’s most famous drug trafficker. Now he’s about to be tested on his pledge to attract private investment to the flagging oil business and help revive the economy.
On Wednesday, the government will hold the first in a series of petroleum auctions that will help open the energy industry, bringing in an estimated $62.5-billion (U.S.) by 2018 and increasing annual output by 500,000 barrels a day. The exploration and production contracts, the first since then-president Lazaro Cardenas nationalized the fields in 1938, will end the monopoly of state-owned Petroleos Mexicanos, or Pemex.
The success of the auctions also will determine whether Mr. Pena Nieto, 48, can reverse a decade-long decline in crude output and fulfill his pledge to double the pace of economic expansion by the time he leaves office in late 2018. The output drop and an almost 50-per-cent plunge in oil prices during the past year have forced Mexico to trim government spending and sweeten the auction-contract terms for prospective bidders.
“This process is vital,” said Vicente Fox, a former president whose election in 2000 broke seven decades of rule by Mr. Pena Nieto’s Institutional Revolutionary Party. “This is the great opportunity for Mexico to mobilize its economy and reach 5-per-cent growth rates, something we haven’t been able to achieve in the past 30 years.”
The auctions give Mr. Pena Nieto, who took office in 2012, a chance to recapture momentum for his economic initiatives after a year in which drug violence and conflict-of-interest accusations about home purchases plagued his administration.
via Mexico ending state oil monopoly in effort to revive economy – The Globe and Mail.
More than 40 oil companies have sought access to geological data under Mexico’s first oil auction in eight decades, showing interest in the process is holding up despite stubbornly low oil prices, according to the nation’s hydrocarbons regulator.
Since the auction, dubbed round one, kicked off in December, foreign and local oil companies have paid fees for access to data containing seismic information for the first set of oil blocks that Mexico will put out for bids. More than a dozen have shown interest in the second set, according to the National Hydrocarbons Commission.
Interested parties include global companies such as Chevron Corp. and BP PLC, regional competitor Ecopetrol SA, of Colombia, and Mexican upstart Sierra Oil & Gas.
“The advance in round one is very gratifying, especially in the circumstances we are in, with oil prices down by 50%,” the commission’s president, Juan Carlos Zepeda, said in an interview.
The tally comes as the commission prepares for the third tender in the auction in April, this time for onshore fields likely to draw interest among small and midsize companies.
via Oil Companies Show Active Interest in Mexican Oil Auction – WSJ.
Mexico will publish between March and April the new number of fields of shale and other more expensive oil and gas deposits to be tendered under an energy reform finalized last year, the National Hydrocarbons Commission (NHC) said on Monday.
The government has for weeks signaled the need to scale back some costlier fields amid a sharp drop in oil prices.
“A redefinition is required, looking at the reality of the markets,” NHC President Juan Carlos Zepeda told reporters.
The likely reduced number of blocks for the exploration and production of shale and other more expensive oil and gas deposits, including parts of the Chicontepec basin, will be published between March and April, he said.
via Mexico to reveal next set of oil tenders between March-April | Reuters.
Major international oil firms including Exxon Mobil Corp. and Royal Dutch Shell PLC are showing interest in the initial phase of a bidding round for exploratory oil and gas blocks in the shallow waters of the Gulf of Mexico that will be assigned by the government midyear, a top energy official said Monday.
The recent plunge in oil prices appears to not to have affected the shallow-water phase of the bidding round because of modest production costs, while a later phase involving more costly production in shale-rock formations will be trimmed back to offer only the most attractive of the so-called unconventional resources, said Juan Carlos Zepeda, head of the National Hydrocarbons Commission.
The commission is overseeing what Mexico is calling “round one,” since it is the first of its kind since an energy overhaul last year that ended the 76-year government monopoly on oil exploration and production by national firm Petroleos Mexicanos, or Pemex.
“Even in this price environment, the round is moving forward quite well,” Mr. Zepeda told journalists during a tour of “data rooms” where oil companies can see seismic and other data on the areas prior to bidding.
Among the seven companies that have been authorized into the data rooms–after paying fees–are Exxon Mobil, Chevron Corp., Shell, Ecopetrol SA and BG Group PLC, the commission said in a press release. A total of 30 companies have shown some interest in the process short of paying for entry into the data rooms, the commission said.
Mr. Zepeda said the shallow-water round is in an area of the Gulf of Mexico where there is already significant oil production and where costs are less than $20 a barrel, making them attractive even in the current environment of depressed prices.
via Oil Majors Show Early Interest in Mexico Bidding Round – NASDAQ.com.