Monterrey 2014 Blog: Round One of Mexico's Energy Bidding Process

By
Rodrigo Carriedo
Elizabeth Gonzalez

In the wake of approving energy reform, Mexico has launched round one of a bidding process for companies interested in oil exploration. 

Tune in live to an Oct. 29 conversation with Mexican congressmen on energy reform.​

 

After years of political impasse, in December 2013 Mexico’s Congress and a majority of state legislatures approved a constitutional reform to expand private-sector participation in the country’s oil and gas development. In the first step of the implementation of the reform, state energy firm Petróleos Mexicanos (Pemex) determined which fields it wants to keep for its own development. During this process, known as Round Zero, Pemex was entitled 83 percent of the proven and probable reserves. On August 13, 2014, the energy minister launched Round One, the bidding process through which the state will tender contracts to companies interested in exploring and exploiting fields or in partnering with Pemex. 

There are two main types of contracts that will be tendered during this round: joint ventures with Pemex for those blocks entitled to the state firm in Round Zero and new exploration or extraction areas and fields that were not requested by nor granted to Pemex. In total, the Ministry of Energy has indicated that 109 blocks for exploration, 60 for production, and 14 for associations with PEMEX will be offered through Round One. 

Officials from the Ministry of Energy and the National Hydrocarbons Commission (CNH) will be meeting investors in Houston, New York, and London between October and November to promote Mexico’s first oil and gas fields bids. The CNH intends to undertake five separate bidding processes according to the type of fields involved. On November 15 the call for bids for shallow water projects will be published. This will be followed by monthly publications of calls for bids of extra-heavy oil, unconventional, onshore, and deep-water projects. The government expects to award the first contracts by mid-April of 2015.  

Three Mexican conglomerates—Alfa, Carso and Grupo México—have declared themselves ready to participate in Round One. The Ministry of Energy estimates that overall new projects will represent investments of $12.6 billion per year over the 2015-2018 period. According to the Mexican government, by 2025 the energy reform will generate 2.5 million new jobs and GDP will increase by two points. 

Text by Rodrigo Carriedo; charts by Elizabeth Gonzalez.