Strong investor appetite to participate in Mexico´s imminent first-ever licensing round has not diminished because of the decline in global oil prices, a senior Mexican official told Argus today.
"What we've heard from companies is that at least at the current levels of oil prices this doesn't affect their decision-making process with regard to the round," Mexico´s deputy oil minister Maria Lourdes Melgar said.
"Oil companies look at the long-term view, and volatility of the oil market is something we can always expect. We are not expecting this to have significant impact. There might be some companies that maybe were not that strong and might decide not to play this time around. But from what we have seen, there is a lot of interest," she said, adding that "for some getting below $60/bl will be sort of breaking point for some projects. We are not expecting to get there yet."
Mexico plans to launch round one next month, starting with shallow-water blocks.
Any oil that companies find can be sold independently, Melgar confirmed. "Once a company gets its oil, they can sell it," she said, adding that the process could lead to new Mexican crude streams.
She said the government is currently fine-tuning the round one acreage, dividing some blocks and consolidating others.
"In some cases, for instance, where we have frontier areas that have not been as explored, we may go for bigger blocks," she said. "One of the issues that needs to be taken into account in the Mexican case is that the areas we are putting in this round in most cases have been explored deeply, for which we have 2D, 3D seismic."
In a speech at the same Oil&Money conference in London, Mexican state-run Pemex chief executive Emilio Lozoya said the majority of the company´s projects are very profitable at current price levels.
He said capital spending in exploration and production could reach $62bn a year in 2014-2025, compared with $25bn/yr at present.
The first package of shallow water blocks in Mexico´s round one will be followed by packages covering extra heavy oil, geologically complex Chicontepec and unconventional, onshore and deepwater areas.
The staggered launches will take place monthly starting in November and running through March 2015, and will generate an estimated $8.5bn in annual investment between 2015 and 2018., the government says.
The entire round one will include approximately 160 blocks, 109 for exploration and 60 for production covering a total of 28,500km2 (7mn acres).
kr/pg
Send comments to feedback@argusmedia.com
If you would like to review other ArgusMedia.com content options, request more information about Argus' energy news, data and analysis services.
Copyright © 2014 Argus Media Ltd - www.ArgusMedia.com - All rights reserved.
