Mexico’s Pemex pays $295 million to settle Siemens dispute

July 21, 2015

7/20/15 Reuters

oil rigsMexican state oil company Pemex PEMX.UL reached a $295 million settlement with a group including German industrial conglomerate Siemens (SIEGn.DE) in a longstanding dispute over a refinery project, a person familiar with the matter said on Monday.

The deal was originally announced in March but did not give details of the final settlement.

A Mexican official close to the negotiations said that Pemex had agreed to settle for $295 million. Earlier in the day, Pemex said in a statement that the deal struck definitively ends the 14-year-long dispute, but it did not give a sum.

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Mexico’s Oil Auction: short-term disappointment v long-term progress

July 16, 2015

7/16/2015 Beyond Brics, The Financial Times

By Duncan Wood, Director, Mexico Institute

Oil Rig 2 by Flickr user tsuda Photo by Flickr user tsudaOn Wednesday July 15, Juan Carlos Zepeda, the president of Mexico’s National Hydrocarbons Commission (CNH), announced the results of bidding for exploration contracts in 14 shallow water blocks in the Gulf of Mexico, the first time in over 75 years that production-sharing contracts have been awarded in the country. The results were eagerly awaited by energy industry analysts the world over. As the envelopes began to be opened, the president’s office and the CNH tweeted an inforgraphic stating that the process would be deemed a success if four to seven contracts were successfully awarded.

In the end, only two blocks were awarded, both to a consortium formed by Sierra Oil of Mexico, Talos Energy of the US and Premier Oil of the UK. The government received offers from just nine bidders (five individual companies and four consortia), a pitiful tally given that 49 companies each paid $365,000 to enter the data rooms and 25 of those companies pre-qualified to bid. Of the majors, only ENI and Statoil made bids, leaving most of the big names on the sidelines.

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Mexico Energy Reform Starts with Thud in Offshore Oil Auction

July 16, 2015

7/15/2015 BloombergBusiness

Oil Rig 2 by Flickr user tsuda Photo by Flickr user tsudaMexico’s first auction of offshore oil leases fell short of the country’s expectations as several majors decided not to participate.

Only two of the 14 shallow-water blocks released on Wednesday received qualifying bids. Exxon Mobil Corp., Chevron Corp. and Total SA passed on the country’s sale of territory in the Gulf of Mexico, 77 years after the country nationalized crude. The 14 percent success rate was less than half the 30 percent to 50 percent goal that the government said would be its minimum for judging the event a success…

“This has to be crushingly disappointing for the government,” Duncan Wood, director of the Mexico Institute at the Woodrow Wilson International Center for Scholars in Washington, said Wednesday. “It has to be seen as a very clear message that they need to do a lot more to make the oil and gas opening a success.”

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Historic Mexican Oil Tender Fails to Attract Investors

July 16, 2015

7/16/2015 Financial Times

oil rigsCrestfallen Mexican officials admitted that the historic tender to open the country’s oil sector to private investors for the first time in 80 years had fallen well short of expectations after only two of the 14 exploration blocks on offer were awarded.

In spite of government hopes of attracting an array of companies and netting some $18bn in investment if all blocks had been awarded on Wednesday, the same consortium comprising Mexican group Sierra Oil & Gas — Talos Energy of the US and Premier Oil of the UK — scooped both of the blocks…

….But as Duncan Wood, director of the Mexico Institute at the Wilson Center, noted, officials had been stressing all along that the only tenders likely to be impacted by the price fall were those for shale prospects, not those in cheap-to-develop shallow waters. “I think that has to be seen as an excuse,” he said. “The blocks on offer just weren’t particularly attractive.”

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Mexico: the big oil sell-off

July 13, 2015

07/13/15 FT.com

Photo by Flickr user tsuda

Photo by Flickr user tsuda

One word is crucial to the terms of Mexico’s historic first oil tender on Wednesday, but it does not appear anywhere in the bid documents. It is Ixtoc. For 30 years, until BP’s Macondo disaster in 2010, this Mexican well had held the lamentable distinction as the source of the world’s worst accidental oil spill.

Like the 14 exploration blocks being auctioned this week, Ixtoc-I was being drilled in the shallow waters of the Gulf of Mexico when it suffered a blowout in 1979. As a result the contracts being awarded this week come with stringent guarantees attached, in case there is another catastrophe.

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Water Scarcity Could Deter Energy Developers From Crossing Border Into Northern Mexico

July 6, 2015

Norma Alicia Valdez conserves water to clean her home, located in the center of Cuatro Cienegas, a farm and business hub set amid a thriving oasis in Mexico's Coahuila state.  The city now struggles with water shortages related to water extraction for large-scale farming nearby. Valdez' family used to farm 20 hectare of Alfalfa, but when the large companies moved in around them and made wells, just north of the city, near Ocampo, Valdez said her family no longer could find sufficient water. As a result, they now only farm 5 hectare.

The state of Coahuila receives little more than 300 millimeters of rain annually (12 inches). So much water is being pumped in two farm regions near Cuatro Ciénegas to irrigate crops and care for livestock that not early enough is left to supply the pools and marshes. With every passing year, the desert claims more land, more ponds, and more streams that used to be wet.Photo © Janet Jarman/Circle of Blue.

Day 8, our final day of our on-going article excerpts. Check out the blog for more, or head straight to our website for the entire article.

Water Scarcity Could Deter Energy Developers From Crossing Border Into Northern Mexico

by Keith Schneider

Industry Still Exuberant

American energy companies spent an average of $US 15 billion a year to develop the Eagle Ford shale since 2008, more than $US 80 billion in total. Mexico authorities think it will take at least $US 100 billion to develop Coahuila’s shale resources.

That figure is well below the $US 662 billion to $US 1.02 trillion in capital spending that Goldman Sachs estimated would be needed to develop Mexico’s shale reserves in an analysis last year.

Some of the difference in cost estimates is the result of the quality of northern Mexico’s shale. Studies in the open geological science literature suggest that the Eagle Ford shale beneath Coahuila differs substantially in structure and carbon composition than the shale beneath Texas. Goldman Sachs researchers also noted in their study that due to the extensive investment in needed infrastructure “we would not anticipate any robust development taking place before 2018-2020.”

The global oil industry, ever audacious in its quest for hydrocarbons, is driven to tap new reserves where they exist, and never more so than during this century. From the icy depths of the Arctic to the perilous high-tech platforms of the Gulf of Mexico, from the isolation of Siberia to the narrow foothill Himalayan valleys of Sichuan, the global energy industry is exploring and tapping new reserves. It’s no surprise that the enthusiasm displayed by the oil and gas industry for northern Mexico’s shale potential is genuine, deep, and characteristically flamboyant.

During a Mexico shale oil and gas summit in San Antonio in February, for instance, business and government authorities rallied around the idea of Coahuila drilling and its role in a U.S.-Mexico-Canada oil and gas alliance capable of competing with OPEC for global leadership in hydrocarbon production.

“The possibility of a North American energy confederation is still something I would like to see on the table – for Canada, Mexico and the United States,” Chris Faulkner, chief executive of the Dallas-based Breitling Energy Corp. told the conference. “It doesn’t seem to be on anyone’s radar in Washington. But if we could strive for North American energy independence first, we would be the second largest oil producing coalition in the world next to OPEC, and would be incredibly formidable in determining world oil policy.  Mexico is in an excellent position. They know it.”


A massive discovery in Mexico could mark the dawn of a new oil boom

June 16, 2015

06/16/15 Business Insider

energy - oil barrelsThe Mexican state-owned oil company Petroleos Mexicanos, or Pemex, says it has discovered one of the most copious group of oil fields in the shallow waters of the Gulf of Mexico, its largest such discovery in five years.

The five fields, situated off the states of Campeche and Tabasco, have total proven, probable, and possible reserves that may be as high as 350 million barrels of crude oil equivalent and could produce as much as 200,000 barrels a day, Pemex CEO Emilio Lozoya told an energy conference in Guadalajara on Wednesday. He called the find an “achievement … of great magnitude.”

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