After failing to attract any bids on two Burgos Basin blocks, Petroleos Mexicanos (Pemex) said two international groups are competing to develop non-associated natural gas reserves in the Fronterizo, one of the basin’s smaller blocks.

According to Pemex, a consortium composed of Amistad Energy, a Houston-based oilfield services company, along with a unit of China National Petroleum Corp. and another Chinese company submitted one bid. The second bid is from a consortium of Brazilian-based Petrobras, Japanese-based Teiukoko Oil Co. and D&S Petroleum, headquartered in Mexico City. The tender will be awarded this week, Pemex said. No other details were offered about the bids.

Pemex set up seven tender packages as part of plan to boost the country’s natural gas production and reduce imports, and has awarded three. One will be issued in January. The two that received no bids are being reviewed and may be awarded without a bidding process, Pemex said.

The state-owned oil and gas monopoly is using multiple service contracts (MSCs) for the bids, which allow private investment in the nationally owned resources. Under the 20-year renewable MSCs, the private companies may contract the work, but they will not own the reserves that are produced. They will, however, share in the profits from the production.

Raul Munoz Leos, the director general of Pemex, said this week that Pemex’s current tax rate needs to be changed to reduce its financial burdens and allow it more authority to seek new investments. Munoz reported that Pemex’s debts have increased 40.7% while its net assets have fallen 24%.

He told Mexico’s El Universal that the “solution to this problem is to take off the straightjacket confining Pemex, as well as the fiscal padlock and the administrative constraints.” Pemex has to be treated and managed as a company, not as a “government secretariat,” or it will continue to become less competitive, he said in published remarks. Among other things, Pemex wants to cut its rate of value added tax to 10% from its current 15%. A proposal now before Congress also would establish lower rates for taxes on new wells and exempt the output of wells producing 30 bbl/d or less.

A new tax regime would help Pemex become “financially sound and able at the same time to make the investments it so badly needs,” said Munoz. If Mexico’s Congress were to approve a new fiscal structure, Pemex could make investments to revitalize the oil and gas sector, with results “emerging in the medium term.”

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