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  HOME | Mexico

Mexico to Put 37 Onshore Blocks on Offer in July Licensing Round

MEXICO CITY – Mexico will look to further consolidate its energy overhaul when it puts 37 onshore blocks on offer in a licensing round in July, the Energy Secretariat said Wednesday.

The blocks cover a total surface area of 9,513 sq. kilometers (3,673 sq. miles), Energy Secretary Pedro Joaquin Coldwell said at an event in Mexico City to announce the call for tenders.

Since the 2014 energy overhaul that ended state oil company Pemex’s decades-old exploration and production monopoly, a total of seven licensing rounds – three for blocks in onshore basins – have been completed and 69 blocks have been awarded.

Those licenses are expected to lead to investments totaling $52 billion over the life of the contracts.

Roughly three-fourths of the winning companies in auctions for onshore blocks have been Mexican.

The July licensing round – known as Round 3.2 – will offer 21 blocks in the Burgos Basin, nine in the Tampico-Misantla-Veracruz basin and seven in the Sureste Basins.

Prospective reserves in the 37 blocks, which Deputy Energy Secretary for Hydrocarbons Aldo Flores said are located in the states of Nuevo Leon, Tamaulipas, Veracruz and Tabasco, are estimated at 260 million barrels of oil equivalent.

Coldwell said that provided there is “geological success” an average investment outlay of $89 million per block will be required to develop those areas.

The blocks each will be awarded under a licensing model in which the government will receive a proportion of the gross revenues from each project in the form of a an additional royalty.

Coldwell said this arrangement would give the participants “flexibility.”

The contracts will be for a period of 30 years with the possibility of two five-year extensions.

The licensing round will take place on July 25.

Mexico recently overhauled its energy sector laws in a bid to boost crude oil output, which has fallen from 3.4 million barrels per day in 2004 to 1.95 million bpd at present.

According to the International Energy Agency, Mexico will require $640 billion in energy investment to achieve production of 2.8 million bpd by 2040.

The Mexican government cannot assume such a “colossal” amount of investment on its own, Coldwell said Wednesday.

 

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