Mexican national oil company Pemex blamed the cancellation of a potentially lucrative deepwater Gulf of Mexico project on weak investor appetite due to competition from recent auctions in Brazil and low oil prices. Mexico’s oil regulator canceled a tender to pick an equity partner for Pemex’s Nobilis-Maximino project, as company interest was not as robust as expected.
Petroleos Mexicanos cited a late October deepwater pre-salt oil auction in Brazil for lessening interest in its project. Six of eight blocks in Brazil were awarded to majors, including Royal Dutch Shell and ExxonMobil.
“(One) factor that affected appetite for new projects was the investment commitment recently taken on by possible bidders,” Pemex said in a statement. Companies that won blocks in Brazil had looked at the Nobilis-Maximino data, it added.
Once a top global crude producer, Mexico is struggling to reverse a dozen years of declining oil and gas output. The failure of the tender is a setback for its attempts to open up its energy production after a decades-long monopoly for Pemex.
However, there are nearly 30 similar pending deepwater projects with tenders that are still going ahead. The cancellation should not be interpreted as a lack of industry interest in those, Alma America Porres, commissioner for the National Hydrocarbons Commission (CNH), told reporters.
She said that 29 companies had begun the pre-qualification process for bidding for those other projects. Some 16 oil companies have also paid to access data rooms associated with the blocks, CNH data shows.
Those tenders are potentially more attractive because companies can bid to develop them without tying up with Pemex.
Oil majors may be put off partnerships with Pemex due to its debts and budget constraints, said Miriam Grunstein, a Mexico City-based energy researcher with Rice University.
Nobilis-Maximino sits near the U.S.-Mexico maritime border in the productive Perdido Fold Belt, and is estimated to contain reserves of about 502 million barrels of mostly light crude.
Nearly 30 companies had begun the process of pre-qualifying for the auction, including Shell and ExxonMobil, according to data from the CNH. It was due to be awarded on Jan. 31.
In its statement, Pemex said weak oil prices - with medium- and long-term projections at US$ 50-US$ 65 per barrel - have been a factor in companies exercising caution about taking on complicated, expensive deepwater projects like Nobilis-Maximino.
Pemex said it would consider a future farm-out, or joint venture, for the project, without providing further details.
“Pemex will continue to promote its partnership strategy in several oil fields that present less technical difficulties and lower risks,” the company said.
A 2013-14 energy reform allowed the firm to enter into equity partnerships with foreign and private producers for the first time, which had previously been barred by law.