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Mexico’s sovereign oil fund is looking to contract marketers for the hydrocarbons it receives from operators with production-sharing agreements (PSA).
The upstream regulator, the National Hydrocarbons Commission (CNH), is holding a tender on behalf of the Fondo Mexicano del Petroleo (FMP) that offers two marketing services contracts -- one for oil and condensates, the other for natural gas.
CNH published a call for bids on Monday, after approving the terms for the three-year contracts at the end of last week. Bids are due Oct. 27.
Marketers may submit offers for one or both of the contracts, according to the bidding terms. Those awarded contracts are to market the hydrocarbons that FMP receives via Mexico’s PSAs, under which operators must turn over a share of production to the state.
The PSAs are one of several upstream contractual models introduced by the Mexican energy reforms, which began in 2013. The FMP also manages royalty payments made to the state under other oil and natural gas contracts, as well as the bonus fees used for tie-breakers in the country’s lease auctions.
CNH plans to award the marketing contracts on Nov. 6 to the bidders that offer the lowest service fee. Under the bidding terms, the fees are capped at 25 cents/bbl for oil and 2.5 cents/MMbtu for natural gas.
The contracts would begin in January. They would replace a short-term agreement that CNH signed in 2016 with PMI Comercio Internacional, the international oil marketing arm of Petroleos Mexicanos (Pemex).
“The transitory articles of the hydrocarbons law indicate that we have until the last day of this year to market [this production] directly through PMI,” CNH president Juan Carlos Zepeda said during a webcast last week. “Starting on Jan. 1, 2018, we have to start operating with a marketer selected through a competitive tender.”
The upcoming tender is open to private marketers, as well state-run companies such as PMI and CFEnergia and CFE Internacional, the fuel marketing arms of federal power utility Comision Federal de Electricidad.
The government’s share of production in the PSAs is determined through competitive bidding for exploration and production (E&P) leases. CNH has used the PSA regime in its three auctions for shallow water blocks, the most recent of which wrapped up in June.
From these auctions, Mexico has signed 15 PSAs with private operators of 70 E&P contracts overall. Pemex also migrated one of its assets, the offshore Ek-Balam field in the Bay of Campeche, to the production-sharing regime last May, bringing the total number of PSAs in Mexico to 16.
Almost all of the current blocks with PSAs are in the exploration or development phase, and most of them contain oil prospects. So far, Mexico has awarded natural gas-rich blocks in onshore basins only, using a different contractual model.
Ek-Balam is the only productive asset among the 16 PSA contracts. It produced 33,790 b/d of crude and 5.79 MMcf/d of gas in June, according to the latest figures from CNH.
However, this year private E&Ps have announced major discoveries at two blocks with PSAs. In July, Houston-based Talos Energy LLC and its partners announced a find with an estimated 1.4-2 billion bbl of light oil at the offshore Block 7 in Campeche. Also in July, Italy’s Eni SpA raised its reserves estimate to 1 billion boe for the Amoca field, also in Campeche.
After cost oil, the Mexican government holds the rights to 68.99% of Block 7’s production and 83.75% of Amoca’s. The state’s share varies among the other contracts, from 20-75%. For Ek-Balam, the government take is 70%.