The Centro Nacional de Hidrocarburos (CNH) has announced the results of Mexico’s 5th, 6th and 7th Oil & Gas exploration Rounds since the reform of the country’s hydrocarbons industry. The Rounds generated a high level of interest from national and international companies of varying sizes.
The CNH fine-tuned the contracts on offer for the second group of bidding Rounds and implemented some of the lessons learned from Rounds 1.1 – 1.4. This attracted a large number of competitive bids, particularly in Round 2.1. As a result, the majority of areas on offer were awarded.
Competition in all three Rounds was fierce, with multimillion-dollar award bonuses offered by bidders to fend off the competition for the most desirable blocks. Rounds 2.2 and 2.3 are expected bring a total investment of around $2bn into Mexico.
Given the success of the Rounds and the significant oil discoveries in recent months by Eni and the Talos Energy, Sierra Oil & Gas and Premier Oil consortium (see our Law-Now on the discovery), all eyes will be on deep-water Round 2.4, which is to be conducted later this year. At the time of writing, it was reported that at least twelve companies had shown an interest in Round 2.4.
Round 2.1
The results of shallow-water Round 2.1 were announced last month, with 10 of the 15 available production-sharing contracts awarded, exceeding the Energy Minister’s goal of 40%. 36 bidders took part, a marked improvement on Round 1. Both Eni and new Mexican player Citla Energy were the biggest winners; they were awarded 3 blocks each (alone and in consortia). Other winners included supermajors Total and Shell and new market entrant Ecopetrol.
The full results of Round 2.1 are displayed below.
| BLOCK | SUCCESSFUL BIDDER | BLOCK | SUCCESSFUL BIDDER |
| Tampico-Misantla Area 1 | N/A | Southeastern Basins Area 9 | Cairn Energy and Citla Energy |
| Tampico-Misantla Area 2 | DEA Deutsche and PEMEX | Southeastern Basins Area 10 | Eni |
| Tampico-Misantla Area 3 | N/A | Southeastern Basins Area 11 | Repsol and Sierra Oil & Gas |
| Tampico-Misantla Area 4 | N/A | Southeastern Basins Area 12 | Lukoil |
| Veracruz Area 5 | N/A | Southeastern Basins Area 13 | N/A |
| Southeastern Basins Area 6 | Petronas and Ecopetrol | Southeastern Basins Area 14 | Eni and Citla Energy |
| Southeastern Basins Area 7 | Eni, Cairn Energy and Citla Energy | Southeastern Basins Area 15 | Total and Shell |
| Southeastern Basins Area 8 | PEMEX and Ecopetrol | | |
Round 2.2
10 onshore blocks were offered under licence contracts in Round 2.2. On 12 July 2017 it was announced that a consortium of Canada’s Sun God Resources and Mexico’s Jaguar Exploración y Producción was awarded 6 of the contracts. A further field was awarded to Mexico’s Iberoamericana de Hidrocarburos in partnership with Mexican Servicios PJP4. The 3 remaining fields attracted no bids. This result surpassed expectations of the Mexican Energy Minister, who had feared low gas prices would perturb bidders. 11 bidders from 5 countries prequalified.
Round 2.3
All of the 14 blocks offered under licence agreements in Round 2.3 were awarded. Jaguar Exploración y Producción scooped up 5 blocks, this time without its Canadian partner. Other winners included: Carlos Slim’s Carso Oil and Gas; a consortium led by Shandong Kerui Oilfield; a consortium of Iberoamericana and PJP4; and Newpek, part of the Alfa group. 28 bidders (21 of them Mexican) from 6 countries prequalified.
The full results of Round 2.3 are displayed below.
| BLOCK | SUCCESSFUL BIDDER | BLOCK | SUCCESSFUL BIDDER |
| Area 1 | Iberoamericana and PJP4 | Area 8 | Jaguar Exploración y Producción |
| Area 2 | Newpek and Verdad Exploration | Area 9 | Jaguar Exploración y Producción |
| Area 3 | Newpek and Verdad Exploration | Area 10 | Shandong, Sicoval and Nuevas Soluciones |
| Area 4 | Iberoamericana and PJP4 | Area 11 | Shandong, Sicoval and Nuevas Soluciones |
| Area 5 | Jaguar Exploración y Producción | Area 12 | Carso Oil and Gas |
| Area 6 | Shandong, Sicoval and Nuevas Soluciones | Area 13 | Carso Oil and Gas |
| Area 7 | Jaguar Exploración y Producción | Area 14 | Jaguar Exploración y Producción |
Further information on the contractual model and requirements for this tender were covered in a previous Law-Now.
Round 2.4
Following the recent discovery, the CNH announced that the next deep-water bidding Round will be delayed by a month to give international entrants the chance to evaluate the market. Round 2.4 is now scheduled to take place at the end of January 2018 – early estimates put investment in Mexico arising out of Round 2.4 at $31bn.
Co-authored by Jessica Hastings, trainee solicitor.
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