MercoPress. South Atlantic News Agency

Mexico’s Pemex gains strong position in Spain’s Repsol with voting alliance

The Mexicans said they are only interested in Repsol’s top-end technology

Mexico's state oil monopoly Pemex said on Tuesday it aims to boost its access to top-end technology to explore for oil in the deep waters of the Gulf of Mexico by increasing its stake in Spanish oil firm Repsol.

Pemex also sees a financial advantage of doubling its stake in Repsol to almost 10%, but has no intentions of taking over the Spanish-controlled company.

Pemex and Spanish builder Sacyr, Repsol's largest shareholder with a 20% stake, announced a pact on Monday to form a voting alliance to increase their presence in management and on Repsol's board.

The move sparked concerns from the government in Madrid, which is worried the strategic oil company could fall out of Spanish hands

“The alliance will enhance our technological reach for our exploration portfolio, we want to leverage the technology Repsol has ... to shore up projects like Chicontepec and in deep waters” said a Pemex spokesperson.

Pemex has sunk billions of dollars in the geologically complicated Chicontepec project in eastern Mexico, with little success. The field only produces around 58,000 barrels of oil per day (bpd), a fraction of Mexico's 2.6 million bpd output.

Meanwhile, the deep waters in Mexico's Gulf hold a potential 29.5 billion barrels of crude equivalent, more than half of Mexico's total oil resources Pemex says, but the company lacks the technical expertise to tap those riches.

“On the financial side, we expect a positive return on investment due to the appreciation of Repsol shares” the spokesperson added, asking not to be named due to company policy.

Mexico is struggling with a sharp decline in oil output from its largest, aging fields, putting at risk government finances, which are heavily reliant on oil revenues.

Pemex currently holds nearly 5% of Repsol and the Mexican company said it would acquire another 5% in the coming weeks. Beyond that, there are no plans to increase its stake further, the Pemex spokesperson said.

The pact with Pemex would bring their joint holding to 29.8%, just below the 30% threshold at which the pair would be required by Spanish law to make an offer for Repsol.