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With BHP Contract in Hand, Pemex Hunting for More Exploration Partners

Mexico is open for business and looking for partners to develop deepwater and onshore oil and natural gas, the director general of state-owned Petroleos Mexicanos (Pemex) said Tuesday.

For one thing, the country needs more upstream and natural gas midstream projects, Jose Antonio Gonzalez Anaya said in Houston at CERAWeek by IHS Markit.

"We want to even the playing field for anyone that wants to enter our gas network," said Gonzalez Anaya, who took over as director general in early 2016. "Mexico is also moving to energy pricing -- including gas -- where the prices are correct...Investment won't take place unless the pricing is right."

Gonzalez Anaya's speech came on the heels of Pemex formalizing a contract with Australia's BHP Billiton to advance development of Trion, a significant Gulf of Mexico discovery in the prolific Perdido Fold Belt, which extends into U.S. maritime waters.

BHP in December was high bidder in a Pemex auction, offering $624 million to clinch the first deepwater partnership ever for Pemex. The Trion field is considered a top prize in the entire GOM.

The BHP partnership is a signal of more U.S. and foreign investments to come in Mexico, Gonzalez Anaya told the CERAWeek audience. The agreement "constitutes a parting of the waters in the history of Pemex," he said. "For 80 years, we were the only players in town."

Now that Mexico allows private investments in its energy sector, the country wants partners to farm out leaseholds and build energy infrastructure.

"Let me invite people," he said. "We are very much under-invested in pipelines and storage facilities in Mexico."

U.S. gas exports to Mexico continue to rise, while Pemex drilling, long under-funded, has declined.

BHP's Steve Pastor, president of petroleum operations, said the agreement with Pemex is "the first step of something we think could expand beyond Trion and run for half a century...There are already four other discovered resources in the near vicinity of Trion. There's a lot of running room here."

Gonzalez Anaya, who said he met with Texas Gov. Greg Abbott to further cement Mexico's relationship with the state, said, "I see lots of opportunities for Texas companies in Mexico and with Pemex, in every area. There's so much trade."

BHP CEO Andrew Mackenzie joined Pemex executives and Mexico President Enrique Pena Nieto in Mexico City for a signing ceremony to develop the Trion field. Mackenzie called the partnership a historic moment for Mexico and the beginning of a new chapter in business relations for BHP. The producer already is a big player in the U.S. GOM deepwater.

The BHP partnership is a "journey that, I am certain, will yield greater development for our country," added Pena Nieto.

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