Mexican oil chamber pushes for upstream auctions

Mexico's private-sector oil company association (AMEXHI) called on the government to reconsider the recent cancellation of two upstream auctions that had been scheduled for next year.

"We hope that thegovernment reconsiders its decision as we believe the auctions are the ideal mechanism to allows the country to reach the production goals proposed by President Lopez Obrador," said AMEXHI, whose 45-company membership includes oil majors Shell, BP and ExxonMobil.

Following instructions from the energy ministry, Mexico's oil regulator (CNH) said yesterday that two upstream tenders scheduled for February have been cancelled. The seven farm-out auctions scheduled for February have been postponed until next October.

"We believe that the auction rounds, successfully operated by CNH, as well as the farm-outs are key instruments for the generation and promotion of investment," AMEXHI said.

Mexico's first-ever shale tender, as well as a tender for onshore conventional resources with a total of 48 blocks, have been cancelled to allow the energy ministry to "review energy policy" and "the definition of the blocks subject to tender," according to a letter from the energy ministry read during the CNH meeting.

Some 38 companies had already prequalified for the upstream auctions, including 11 bidders interested in the farm-outs.

President Andres Manuel Lopez Obrador, known as AMLO, took office on 1 December, pledging to honor contracts awarded to private-sector companies following the 2014 reform that ended state-owned Pemex's monopoly as long as they started to produce more oil and gas.

AMLO also pledged to increase production to 2.4mn b/d of oil by 2024 from the current 1.7mn b/d.

"We share the government's objective to increase hydrocarbon production ... and we celebrate the intention to strengthen Pemex as we believe that private companies are a complement, not a substitute to the state-owned company."

CNH has held three upstream rounds for onshore and offshore blocks, as well as three farm-outs in which Pemex has partnered with the private sector to develop acreage awarded under the reform. More than 100 contracts have been signed with 73 companies from 20 countries, while total investment is expected to reach $161bn if all licenses prove viable.