Wednesday, Mexico followed up July’s bust of an oil drilling rights auction with exponentially higher results for the second.
The Mexican government is working to turn around its declining oil production rate that has been trending downward for more than a decade. The country recently ended a 75-year state monopoly on the commodity to entice foreign investment to help revitalize its oil industry. But the first auction held in July did not meet their expectations because of strict regulations attached to the first blocks that were up for bids. As a result, only two of the 14 blocks up for bid were awarded contracts. The country’s National Hydrocarbons Commission quickly made adjustments to the regulations after the failure of the first auction.
The second auction held on Wednesday included five blocks in the Gulf of Mexico up for bid and contracts were awarded for three.
Italy-based Eni International won the most attractive block, paying more than double Mexico’s minimum asking price to outbid competitors. The second block auctioned off went to Pan American Energy LLC, a subsidiary of BP. The winner of the third block went to a partnership formed by Houston-based Fieldwood Energy LLC and Mexico-based Petrobal.
Insider’s project production could begin as early as 2020 for the blocks awarded.
A third auction is set to take place in mid-2016 for deepwater areas in the Gulf of Mexico. This auction is expected to draw the most attention because of large oil and gas reserves previously found in nearby US waters.