Officials overseeing Mexico’s multiple-service contract (MSC) project took comments from the government, outside consultants and potential contractors before agreeing to move their first natural gas contract bidding dates to February instead of December. The extra time, they said, will be used by Petroleos Mexicanos (Pemex) to add new public works laws into the contracts, as well as give bidders the opportunity to include possible exploration and development costs in next year’s budgets.

The MSCs, which have already gone through a second draft, will be finalized in January once the new laws take effect, said Sergio Guaso of Pemex. Guaso and other Pemex officials met with potential contractors and consultants for two days in Veracruz earlier this month to share the potential economic benefits and concerns of the new program. Pemex predicts that the contracts could bring from US$6-$8 billion for the country in five specific regions of the Burgos basin that will be tendered in the first round. With the MSCs, natural gas production could reach 1 Bcf/d of non-associated gas within a few years. Pemex now produces about 4.4 Bcf/d, of which 1.3 Bcf/d is non-associated gas.

Although there has been criticism by some Mexican legislative representatives and monopoly advocates who fear that outside investors will disrupt the nationalism Pemex represents, Guaso said the recent strike threats at Pemex, which were ended with government intervention, show how well the government can interact with labor. Mexico’s President Vicente Fox is a strong advocate of methods to encourage outside investment in the country, including the MSCs.

“The solution to the recent labor problems is a clear sign of Pemex’s and the federal government’s strength,” said Guaso. Pemex workers had threatened a strike, but Guaso said the “labor problem did not affect Pemex’s projects development, including the Multiple Services Contracts project.” He noted that from the start, the Fox administration has supported the MSC development.

Guaso also turned back criticism that the MSCs are taking too long to begin. He reminded conference attendees that the bidding call is coming “only 14 months after Pemex announced the MSC project” in December 2001. The generic model’s final draft is taking into consideration the Public Works Law and its rules, as well as several legal and economic workshops, which have given Pemex officials and potential contractors the chance to discuss legal and economic issues. Pemex also is defining the lease blocks for the first bidding round.

“Blocks with enough locations to design the minimum work program and with potential for a 20-year program” will be included in the first round, he said. Reserves would be certified by a third party, and there would be data room integration in time for the bidding round with the advice of specialized firms. Above all, said Guaso, “it is imperative for the country to continue with the Multiple Service Contracts implementation,” which he said would ultimately diminish the country’s need to import natural gas.

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