- DAILY GPI
- MEXICO GPI
- SHALE DAILY
In ongoing energy reform, Mexico state-owned oil company Petroleos Mexicanos (Pemex) will hold on to the majority of its currently producing oil fields, but in the months ahead, bids will be taken from parties that want to participate in the development of reserves in four packages outlined by Pemex.
The first package is composed of mature fields; the second, extra-heavy oil; the third, deepwater natural gas; and the fourth contains deepwater fields in the Perdido area. The four packages are made up of 10 projects.
The projects were chosen for their "...high technical complexity, capital intensity or other strategic considerations within our portfolio of projects [and] can benefit from the participation of companies that complement the capital, knowledge and operational capacity of Pemex," said Pemex Director General Emilio Lozoya Wednesday, according to an English translation of his presentation.
The first package includes three onshore fields for which Pemex has the goal of optimizing recoveries and profitability through the application of advanced technologies. The fields account for 248 million boe of proved and probable (2P) reserves. They are expected to require an investment of $1.7 billion to develop over the next five years. The first package also includes three offshore fields in which the need for $6.3 billion of investment over the next six years is foreseen.
The second package is focused on three areas prospective for extra-heavy crude oil with API gravities of 11 degrees or less. Because of the heavy nature of the crude, it represents a particular technical challenge for Pemex to develop, Lozoya said. The fields are Ayatsil, Tekel and Utsil. The main field, Ayatsil, is expected to begin production late this year. The fields have 2P reserves of 747 million boe and will require an investment of $6.2 billion over the next 10 years, Lozoya said.
The third package entails "two giant gas fields" in deep water that contain 212 million boe of 2P reserves and will require $6.8 million of investment over 10 years, according to Lozoya. They are in the Lakach gas field, which is offshore the Mexican state of Veracruz. Lozoya said participants in developing these resources would benefit from the presence of infrastructure in the region that Pemex is currently developing.
In the fourth package, Lozoya said, Pemex is seeking two partnerships to develop recently discovered deepwater fields in the Perdido area. The resources are still being defined, but they are estimated to total 500 million boe. Minimum investment necessary for development is estimated at $11 billion over eight years.
"In summary, Pemex has identified, among the fields that have been assigned, 10 strategic partnership opportunities to consolidate in the short term in a period of 13 months beginning in November of this year," said Lozoya, according to a translation of his remarks. Combined, the 10 farm-out opportunities involve investment of more than $32 billion over time horizons ranging from five to 10 years.
The areas were assigned with a mind to balance Pemex's experience with legacy production and the need for the infusion of technical know-how in order to develop more technologically challenging reserves, according to Lozoya.
"They are wanting to jump start investment in getting shale technology into Mexico and shale operators. They're wanting to grow natural gas production, paying attention to the shale side of it," Mexico energy sector expert and consultant George Baker of the website energia.com and publisher of Mexico Energy Intelligence told NGI. "They're trying to do two things. They're trying to pay attention to increasing oil production, and paying attention to non-conventional gas."
Besides the areas being opened to outsider investment, Pemex also intends to convert some of its existing relationships with contractors to more of a partnership basis "to better align the interests of the government, Pemex and contractors..." Lozoya said. The conversions are to take place in two packages of 11 contracts each, he said.
Lozoya said current investment in Pemex exploration and production is about $25 billion per year, about 2% of the country's gross domestic product (GDP). The investment proposed for the 10 farm-outs would increase that investment by 16%, or by more than three-tenths of GDP.
Under the reforms, Pemex is to retain the rights to 83% of the country's 2P reserves, but it will only be allowed to claim about 21% of Mexico's possible reserves.
Last week, Mexico's Congress approved legislation that opening the country's energy sector to private investment (see Daily GPI, Aug. 7). Mexican President Enrique Pena Nieto on Monday signed the legislation into law.